Skip to content

    Indraprastha Gas Limited

    IGL
    Oil, Gas & Consumable Fuels·13 Feb 2026
    Management Summary

    Indraprastha Gas delivered strong financial results in Q3 FY26 with significant YoY growth in EBITDA and PAT, driven by volume expansion and anticipated benefits from recent regulatory changes. While the phase-out of DTC bus fleets and temporary GRAP restrictions impacted volumes, the company is optimistic about future growth from new geographical areas and increased vehicle conversions, alongside strategic capex and international expansion plans.

    Highlights

    5

    • Total sales volume grew 3% YoY to 867 million SCM.

    • EBITDA increased 31% YoY to INR473 crores, and 7% sequentially.

    • PAT grew 25% YoY to INR358 crores.

    • Regulatory changes (VAT reduction, 2-zone tariff) expected to positively impact margins by ~INR1.25/SCM.

    • CNG vehicle conversions increased from 21,000 to 26,000 per month due to GST rate reduction.

    Concerns

    4

    • DTC bus fleet phase-out significantly impacted CNG volumes, declining from ~40,000 kgs/day in Q2 to ~6,000 kgs/day in Q3, expected to be zero by March 2026.

    • Volatility in gas costs and adverse forex impacts (7-8% rupee devaluation) on procurement expenses, leading to INR2-2.5/SCM increase in gas cost.

    • GRAP implementation in Delhi temporarily impacted Q3 volumes due to pollution-related restrictions.

    • A one-time provision of ~INR28 crores was made in Q3 FY26 for the New Labour Code.

    Key financials

    Single quarter

    07 metrics
    1. 01Total Sales Volume867 Mn+3%YoY
    2. 02Average Daily Sales Volume9.43 MMSCMD
    3. 03Revenue₹4,465 Cr+8%YoY
    4. 04EBITDA₹473 Cr+31%YoY
    5. 05PAT₹358 Cr+25%YoY

    Segment breakdown

    VolumeShare of Total
    Delhi (CNG+PNG)5.43 MMSCMD56.0%
    Noida/Ghaziabad2.24 MMSCMD23%
    Newer GAs1.26 MMSCMD13.5%
    Heatmap· 2 shared metrics

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Capex

    ₹1,250 crores

    Guidance & targets

    12
    CategoryTargetPriority
    Volume
    Average Daily Sales Volume
    10 MMSCMD
    		High
    Volume
    Annual Volume Addition
    1 million SCM
    		High
    Volume Growth
    Delhi Volume Growth (post-DTC)
    8-10%
    		High
    Volume Growth
    NCR Zone and Outside Volume Growth
    17-18%
    		High
    EBITDA Margin
    EBITDA Margin per SCM
    7%
    		Medium
    Capex
    Core Business Capex
    INR1,200-1,500 crores
    		High
    Capex
    Diversification Capex
    INR500-800 crores
    		High
    CNG Stations
    New CNG Stations Added
    80-100 stations
    		High
    Sourcing Mix
    RLNG vs Domestic Gas Mix
    50% RLNG, 50% Domestic
    		High
    Landed Price
    Landed Gas Price
    12% of Brent
    		High
    Commercial Vehicle Gas (CVG)
    CVG Contribution
    5-10%
    		Medium
    International Sales Potential
    Middle East Sales Potential
    6 million
    		High

    What to watch in Q4 FY26

    4

    DTC Bus Volume Contribution

    Next quarter (by March 2026)
    Current~6,000 kgs/day in Q3 FY26
    Target~0 kgs/day

    Why it matters

    Verifies the complete phase-out of a significant volume headwind, allowing underlying growth to be more visible.

    DTC sales: Oct ~80,000 kgs per day, then further tapered to around 54,000 kgs in November. And December, it was left to around 22,000 kgs per day. So now almost only below, I think, 100 buses are left out, and we what we have been made to understand from DTC, I think by March, this DTC volume will be almost 0.

    Risks & concerns

    5
    RiskSeverity

    DTC/DIMTS Fleet Transition

    Significant decline in volumes from DTC buses, expected to be zero by March '26. DIMTS volumes also declining, but over a longer period (8-10 years). — Management acknowledged

    medium

    Gas Cost Volatility & Forex Impact

    Volatility in gas costs and adverse forex (rupee devaluation of 7-8%) led to INR2-2.5/SCM increase in gas cost, partly offset by Gujarat VAT reduction. — Management acknowledged

    medium

    GRAP Implementation

    Pollution-related GRAP measures in Delhi (school closures, bus restrictions) temporarily impacted Q3 volumes, but weather has improved, and GRAP lifted. — Management acknowledged

    low

    New Labour Code Provisions

    INR28 crores provision made in Q3 FY26 as a one-time impact, rules yet to be notified. — Management acknowledged

    low

    CGD Sector M&A Hurdles

    High penalties on GAs make M&A difficult without regulatory modification, leading to negative valuations for potential targets. — Management acknowledged

    medium

    Q&A highlights

    8

    “DTC sales: Oct ~80,000 kgs per day, then further tapered to around 54,000 kgs in November. And December, it was left to around 22,000 kgs per day. So now almost only below, I think, 100 buses are left out, and we what we have been made to understand from DTC, I think by March, this DTC volume will be almost 0.”

    Clarifies the significant and rapid decline in a key institutional CNG customer, indicating a near-term headwind that will soon be fully phased out.

    asked by Yogesh Patil

    3 min read7 chapters

    Detailed Narrative

    01

    Q3 FY26 Performance Overview

    Indraprastha Gas reported a 3% YoY growth in total sales volume to 867 million SCM in Q3 FY26, with average daily sales reaching 9.43 MMSCMD. Revenue increased by 8% YoY to INR4,465 crores, while EBITDA saw a robust 31% YoY growth to INR473 crores. Profit After Tax (PAT) also grew by 25% YoY to INR358 crores, demonstrating strong operational execution despite some headwinds.

    02

    Impact of Regulatory Changes on Profitability

    The company anticipates a positive structural impact on margins from two key regulatory recalibrations. The replacement of 15% VAT with 2% CST on domestic gas from Gujarat (effective Dec 2025) and the rationalization of the gas transmission framework to a 2-zone tariff regime (effective Jan 2026) are expected to boost EBITDA margins by approximately INR1.25/SCM. This includes INR0.75/SCM from transmission tariff, INR0.20-0.25/SCM from Gujarat VAT, and INR0.30/SCM from a one-time📎 Labour Code provision.

    03

    Volume Dynamics and Growth Drivers

    While overall sales volume grew 3% YoY, the CNG segment, adjusted for institutional volumes, grew approximately 10%. PNG segment volumes increased 5% YoY, with domestic and commercial PNG growing 8% each. Growth in newer geographical areas (outside Delhi and NCR) was particularly strong at ~17%, contributing about 57% of incremental volume, whereas Delhi's growth was almost flat (0.5-1%) and Noida/Ghaziabad grew ~6.2%.

    04

    DTC Bus Fleet Phase-out and Temporary Headwinds

    The phase-out of DTC bus fleets significantly impacted CNG volumes, with daily sales from DTC buses declining from ~40,000 kgs in Q2 FY26 to ~6,000 kgs in Q3 FY26, and expected to reach zero by March 2026. Additionally, the GRAP implementation in Delhi due to high pollution temporarily suppressed volumes in Q3, leading to school and bus closures, but this impact is now normalizing.

    05

    Capital Expenditure and Network Expansion

    IGL spent INR847 crores on core business capex in the first nine months of FY26, with an annual plan of approximately INR1,250 crores. This includes INR190 crores for PNG, INR190 crores for steel network, INR116 crores for CNG, and INR560 crores for MDP. The company plans to add 80-100 CNG stations per year for the next 3-5 years, with 40-45% of capex allocated to CNG and the balance to pipeline and MDP.

    06

    International Expansion and Diversification Initiatives

    IGL has qualified for Stage 1 of a Middle East tender and is preparing for Phase 2 bid submission in April 2026, targeting a long-term sales potential of ~6 million. Domestically, the company is pursuing a 200 MW captive power plant project, with a tender expected within the next month, though land allocation for the JV with Rajasthan is still in progress. Diversification capex of INR500-800 crores is planned from FY27 for renewables, CPG, and LNG infrastructure.

    07

    Gas Sourcing Strategy and Cost Management

    The current gas procurement mix is 43% APM, 7% NWG, 6% HPST, and 42% RLNG. Going forward⏳, IGL aims for a 50% RLNG and 50% domestic gas mix, with a target landed price of 12% of Brent. While rupee devaluation (7-8%) increased gas costs by INR2-2.5/SCM, this was partially offset by the Gujarat VAT reduction, helping to maintain gas cost per SCM more or less stable.

    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.