Indraprastha Gas Q1 FY27 earnings call

Indraprastha Gas Limited reported a robust Q1 FY27, achieving its highest ever quarterly turnover of over INR5,000 crores, marking a 16% year-on-year increase compared to the same quarter last year. The company's average daily gas sales volume grew by 5.8% to 9.66 MMSCMD, up from 9.13 MMSCMD in the prior year's Q1. Despite challenges from higher gas costs, IGL reported an EBITDA of INR296 crores and a Profit After Tax of INR186 crores, demonstrating resilience and stable operations.

In Q1 FY27, IGL's gas sourcing comprised 48% domestic and 52% imported gas. Approximately 3.9-4 million of the imported volume came from long-term contracts, with an additional 0.6-0.7 million from pool gas and 0.25-0.3 million from spot purchases, necessitated by force majeure^🌐 issues in West Asia. The average gas cost for the quarter hovered around INR40-45 per SCM, with management noting continued turbulence and increases in July. To mitigate price volatility, IGL initiated hedging strategies in May, leveraging the stability observed in Henry Hub prices.

IGL continued its infrastructure expansion, adding approximately 25 kilometers to its steel network, now totaling 2,600 km, and increasing its MDPE pipeline by 500 kilometers. The domestic PNG customer base expanded to over 35 lakh connections, while industrial and commercial connections reached approximately 13,600. The company commissioned a new city gate station at Rohini, Delhi, and commenced LNG operations in the NCR region. Furthermore, IGL has conditionally accepted and begun technical feasibility studies for developing areas in Gurugram and Faridabad, despite ongoing litigation.

Overall CNG sales volume, net of DTC and DIMTS, increased by approximately 11% year-on-year, with Delhi experiencing a 9% rise and other states showing double-digit growth. The company recorded an average daily CNG volume of 5.31 million kg for the quarter. CNG vehicle additions and conversions have seen significant momentum, averaging 27,300 vehicles per month over the last six months, a substantial increase from 18,000 per month in the same period last year, indicating strong future demand.

Management addressed concerns regarding the Delhi EV policy, which mandates only EV registrations for 3-wheelers from January 1, 2027. Despite this, IGL estimates a minimal impact on overall CNG volumes, projecting less than 1% in 2027 and less than 3% by 2030, given the 15-year life cycle of existing 3-wheelers and ongoing advocacy efforts. For 4-wheelers, there is currently no indication of a similar policy, and new registrations in Delhi show 42% of passenger vehicles are CNG-based, reinforcing confidence in continued CNG growth.

IGL incurred a capital expenditure of INR327 crores in Q1 FY27, demonstrating its commitment to expanding and strengthening its infrastructure. For the full fiscal year, the company plans a total capex of INR1,800-2,000 crores. This includes INR1,200-1,500 crores allocated for core activities such as PNG infrastructure development and expansion, and an additional INR500-600 crores earmarked for business diversification opportunities. This aggressive capex plan underscores IGL's commitment to long-term growth and market presence.