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    Indraprastha Gas

    IGLGood
    Oil, Gas & Consumable Fuels·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

    8

    • 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

    1

    • APM Gas De-allocation

    What Changed2

    vs Q2 FY26

    Guidance items6 → 5 (-1)Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue₹4,317 Cr+11%YoY
    2. 02EBITDA₹512 Cr-11%YoY
    3. 03PAT₹356 Cr-11%YoY
    4. 04EBITDA per SCM₹6.16+33%QoQ
    5. 05Total Sales Volume831 Mn+6%YoY

    Segment breakdown

    CNG
    6% Volume Growth9% Volume Growth (Ex-DTC)5.2 Mn Sales Volume
    PNG - Domestic
    11% Volume Growth1.81 lakhs New Connections
    PNG - Industrial
    8% Volume Growth0.86 MMSCMD Daily Volume
    PNG - Commercial
    14.0% Volume Growth0.24 MMSCMD Daily Volume
    List

    Guidance & targets

    5
    CategoryTargetPriority
    Volume
    Annualized Volume Growth
    10-11%
    		High
    Volume
    Exit Daily Volume
    10 MMSCMD
    		High
    Margin
    EBITDA per SCM
    Rs. 7 to Rs. 8
    		Medium
    Capex
    Annual Capex
    ₹1,400-1,500 crores
    		High
    Capacity
    New CNG Stations
    102
    		High

    Risks & concerns

    4
    RiskSeverity

    APM Gas De-allocation

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

    high

    EV Transition in Public Transport

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

    medium

    High Power and Fuel Costs

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

    low

    Areas of Evasion(1)

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

    Q&A highlights

    3

    “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

    2 min read4 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.