Indraprastha Gas Limited — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

IGL delivered a resilient quarter characterized by strong volume growth across all segments despite headwinds in the DTC bus category and reduced APM gas allocation. While margins were pressured by higher gas sourcing costs, sequential EBITDA per SCM showed significant recovery. Management is banking on regulatory reforms like transmission tariff rationalization and state tax reductions to drive long-term EBITDA margins toward the ₹7-8 per SCM range.

Highlights

  • Revenue reached ₹4,317 crores, marking an 11% year-on-year increase.

  • EBITDA stood at ₹512 crores, an 11% decline YoY due to reduced APM gas allocation.

  • Profit After Tax (PAT) was ₹356 crores, down from ₹400 crores in the previous year.

  • Total sales volume grew 6% YoY to 831 million SCM, with average daily volumes at 9.13 MMSCMD.

  • CNG volume growth was 6% overall, but 9% when excluding the declining DTC bus segment.

  • EBITDA per SCM improved sequentially to ₹6.16, up 33% from the adjusted Q4 FY25 figure.

  • PNG segments showed robust growth: Domestic (+11%), Industrial (+8%), and Commercial (+14%).

  • Management set an exit volume target of 10 MMSCMD by the end of FY26.

Concerns

  • APM Gas De-allocation

Key financials

  1. Revenue ₹4,317 Cr +11%YoY
  2. EBITDA ₹512 Cr -11%YoY
  3. PAT ₹356 Cr -11%YoY
  4. EBITDA per SCM ₹6.16 +33%QoQ
  5. Total Sales Volume 831 million scm +6%YoY

What they filed

Q1 FY27: revenue up 17.2%, net profit down 44.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,698 3,759 3,948 3,914 4,023 +9%4,068 +8%4,163 +5%4,587 +17%
EBITDA535 362 493 511 441 −18%471 +30%421 −15%294 −42%
Net profit454 325 453 428 385 −15%392 +21%339 −25%238 −44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • CNG
    6% Volume Growth9% Volume Growth (Ex-DTC)5.2 million kg/day Sales Volume
  • PNG - Domestic
    11% Volume Growth₹1.81 lakh New Connections
  • PNG - Industrial
    8% Volume Growth0.86 MMSCMD Daily Volume
  • PNG - Commercial
    14% Volume Growth0.24 MMSCMD Daily Volume

Guidance & targets

Volume

  • Annualized Volume Growth Volume · next 2-3 years · High confidence 10-11%

    Previously 7-8% → 10-11%

    I think 10% to 11% is the guidance for next two years to three years.

    — K. K. Chatiwal, Managing Director

  • Exit Daily Volume Volume · by end of FY26 · High confidence 10 MMSCMD

    Previously 9 MMSCMD → 10 MMSCMD

    we should end the year at around 10 million.

    — K. K. Chatiwal, Managing Director

Margin

  • EBITDA per SCM Margin · long-term · Medium confidence Rs. 7 to Rs. 8
    Basically the EBITDA margin should improve, and the long-term guidance has always been Rs. 7 to Rs. 8.

    — K. K. Chatiwal, Managing Director

Capex

  • Annual Capex Capex · FY26 · High confidence ₹1,400-1,500 crores
    we have taken like on the core business for the annual, the financial year around Rs. 1,400 crores to Rs. 1,500 crores for this year.

    — Mohit Bhatia, Director (Commercial)

Capacity

  • New CNG Stations Capacity · FY26 · High confidence 102
    we have a plan for commissioning of 102 stations during the entire year.

    — Mohit Bhatia, Director (Commercial)

Risks & concerns

  • APM Gas De-allocation

    high

    Reduced allocation of cheaper APM gas forced IGL to source more expensive RLNG, impacting EBITDA.

    Both acknowledged

  • EV Transition in Public Transport

    medium

    DTC and DIMTS buses are transitioning to EV, leading to a decline in a previously stable CNG volume segment.

    Both acknowledged

  • High Power and Fuel Costs

    low

    Operating costs for compressors are high, though management claims to have reduced them by ₹0.05-0.06 per SCM sequentially.

    Analyst acknowledged

Areas of evasion (1)

  • Specific timeline for the implementation of the new transmission tariff (stated as 'three to four months').

Q&A highlights

2 direct
Gas Sourcing Mix and APM Allocation Direct
APM as of the second fortnight is around 3.08 MMSCMD, so out of the total 6.79 MMSCMD. So, that is close to around 42%.

Reveals the extent of APM gas de-allocation which is the primary driver of margin compression.

Asked by Probal Sen, ICICI Securities

Impact of Transmission Tariff Rationalization Partial
whatever is available from various sources, we feel that Rs. 1 per SCM plus minus Rs. 0.30... Rs. 0.70 to Rs. 1.30 should be the range.

Quantifies the potential cost savings from moving to a single-zone tariff, which could significantly boost margins.

Asked by Probal Sen, ICICI Securities

State Taxation Rationalization in UP and Rajasthan Direct
UP, where you have 10% input, 12.5% on the output, so total 23% - 24% impact is there. So... maybe 10% - 11% we are thinking from 23.5% to 10%.

Highlights a major potential margin lever if state governments rationalize VAT/input taxes.

Asked by Somaiah V, Avendus Spark

2 min read 4 chapters

Detailed narrative

Volume Growth Outpaces Sector Headwinds

IGL reported a healthy 6% YoY volume growth, reaching 9.13 MMSCMD. This growth is particularly notable as it was achieved despite the gradual phase-out of CNG buses by DTC and DIMTS in favor of EVs. Excluding the DTC segment, CNG volumes grew by 9%, driven by a 17% increase in new and retrofitted CNG vehicle additions, averaging 18,500 vehicles per month. Management is confident that as DTC volumes bottom out, natural growth and new Geographical Areas (GAs) will propel total volumes to an exit rate of 10 MMSCMD by the end of FY26.

Margin Recovery and Sourcing Dynamics

EBITDA margins faced pressure from reduced APM gas allocation, which now stands at approximately 42% (3.08 MMSCMD). However, EBITDA per SCM showed a strong sequential recovery to ₹6.16. Management maintains a long-term target of ₹7-8 per SCM, contingent on regulatory tailwinds. The sourcing mix is currently balanced with two-thirds from domestic sources (APM, NWG, HPHT, CBM) and one-third from RLNG, with a strategic effort to balance RLNG contracts between Brent, Henry Hub, and Crude links.

Regulatory Reforms as Profitability Catalysts

Two major regulatory shifts are expected to benefit IGL's core structure. First, the PNGRB's notification of a single-zone transmission tariff for CNG and domestic PNG is estimated to provide cost savings of ₹0.70 to ₹1.30 per SCM. Second, discussions are ongoing with state governments in UP and Rajasthan to rationalize VAT and input taxes. In UP, a potential reduction from the current 23-24% impact to 10-11% could translate to savings of ₹5.50 to ₹6.00 per SCM, which IGL plans to partially pass on to consumers to drive further conversions.

Infrastructure and Strategic Diversification

IGL is aggressively expanding its network with a ₹1,400-1,500 crore capex plan for FY26, targeting the commissioning of 102 new CNG stations. Beyond core gas distribution, the company is diversifying into smart meter manufacturing through its JV, IGTL, which has started commercial production. Additionally, IGL is entering the LNG retailing space with three stations expected to be commissioned in the current quarter across Delhi-NCR, Rewari, and Greater Noida, targeting long-haul highway transport.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Oil, Gas & Consumable Fuels earnings calls