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    Indraprastha Gas

    IGLGood
    Oil, Gas & Consumable Fuels·28 Apr 2025
    Management Summary

    IGL delivered a strong recovery in Q4 margins despite volatility in domestic gas allocations. The company is successfully mitigating APM gas cuts through 'New Well Gas' and long-term RLNG contracts. Management is pivoting towards aggressive expansion in new Geographical Areas (GAs) and diversifying into renewable energy with a 500MW solar project to hedge power costs and improve ESG standing.

    Highlights

    7

    • Annual Gross Turnover reached ₹16,400 crores, a 6% YoY increase despite sourcing challenges.

    • Q4 EBITDA per SCM improved significantly to ₹6.03 from ₹4.34 in Q3 FY25.

    • Total average daily volumes for FY25 stood at 8.99 MMSCMD, up 6% YoY.

    • Management provided robust FY26 volume growth guidance of 10%.

    • FY26 Capex guidance nearly doubled to ₹2,000+ crores, including diversification into solar energy.

    • CNG vehicle conversions averaged 18,000+ per month, with a record 27,000 additions in January.

    • PNG sales showed double-digit growth of 11% YoY, led by domestic segment (+12%).

    Concerns

    2

    • Domestic Gas (APM) Allocation Cuts

    • Regulatory Ban on CNG Vehicles

    Key financials

    Single quarter

    05 metrics
    1. 01Gross Turnover₹4,323 Cr+5%YoY
    2. 02EBITDA₹497 Cr+37%QoQ
    3. 03PAT₹349 Cr+22%QoQ
    4. 04EBITDA per SCM₹6.03+38.9%QoQ
    5. 05Average Daily Volume9.18 MMSCMD+0.8%YoY

    Segment breakdown

    CNG
    6% Volume Growth (Annual)8% Volume Growth (Ex-DTC)
    PNG
    11% Volume Growth (Annual)12% Domestic Growth10% Industrial Growth
    List

    Guidance & targets

    4
    CategoryTargetPriority
    Volume
    Total Sales Volume Growth
    10%
    		Medium
    Margin
    EBITDA per SCM
    7-8
    		Medium
    Capex
    Total Capital Expenditure
    ₹2,000+ crores
    		High
    Capacity
    New CNG Stations
    90-100
    		High

    Risks & concerns

    5
    RiskSeverity

    Domestic Gas (APM) Allocation Cuts

    Volatility in domestic gas allocation has increased sourcing costs by 13% YoY, forcing reliance on more expensive RLNG and New Well Gas. — Both acknowledged

    high

    Regulatory Ban on CNG Vehicles

    Draft policies suggest potential bans on non-EV two and three-wheelers, which could impact IGL's core CNG market. — Analyst acknowledged

    high

    DTC Fleet Electrification

    DTC bus volumes have already dropped by ~40% as the fleet transitions to electric buses. — Management acknowledged

    medium

    Areas of Evasion(2)

    • Specific timeline for MNGL IPO
    • Exact impact of potential EV bans in Delhi beyond lobbying efforts

    Q&A highlights

    3

    “3.51 is APM allocation as of now and 1.38 is new well gas... 51 is through APM, new well gas, and 49 is through other sources.”

    Clarifies how IGL is managing the reduction in low-cost domestic gas by using 'New Well Gas' which is priced higher but more available.

    asked by Probal Sen, ICICI Securities

    2 min read4 chapters

    Detailed Narrative

    01

    Margin Recovery and Sourcing Strategy

    IGL saw a sharp recovery in Q4 EBITDA per SCM, rising to ₹6.03 from ₹4.34 in the previous quarter. This was achieved by passing through higher gas costs and optimizing the sourcing mix. The company is now sourcing 'New Well Gas' at 125% of the volume cut from APM allocations, effectively mitigating the shortfall. Management expects margins to stabilize in the ₹7-8 per SCM range in the long term as RLNG prices soften and domestic supply stabilizes.

    02

    Aggressive Capex and Diversification

    The company has planned a record Capex of ₹2,000+ crores for FY26, a significant jump from ₹1,100 crores in FY25. Approximately ₹1,300-1,400 crores will be dedicated to core CGD infrastructure, while ₹400-500 crores is earmarked for a new 500MW solar plant in Rajasthan. This solar project is expected to provide an equity return of 14-15% and reduce operating power costs by ₹5-8 per unit through captive consumption.

    03

    Navigating the EV Transition in Delhi

    The transition of the Delhi Transport Corporation (DTC) fleet to electric buses has reduced IGL's DTC volumes from 1.8-1.9 MMSCMD to 1.1 MMSCMD. Management is countering this by focusing on the private vehicle segment, where conversions remain strong at 18,000 per month. They are also lobbying the Delhi government to recognize CNG as a 'bridge fuel' in the upcoming EV Policy 2.0 to prevent a total ban on non-electric commercial vehicles.

    04

    Growth Engines: NCR and New GAs

    While Delhi GA growth (ex-DTC) was modest at 5%, the NCR regions (Noida, Gurugram) and new Geographical Areas (GAs) like Ajmer and Kanpur are showing robust growth of 13% and 32% respectively. These new areas now contribute 0.82 MMSCMD to total volumes. Management expects these regions to be the primary drivers for the 10% volume growth target in FY26, with most new GAs already reaching EBITDA-positive status.

    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.