Indraprastha Gas Limited — Q3 FY26 earnings call

Call held 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

  • 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

  • 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

  1. Total Sales Volume 867 million scm +3%YoY
  2. Average Daily Sales Volume 9.43 MMSCMD
  3. Revenue ₹4,465 Cr +8%YoY
  4. EBITDA ₹473 Cr +31%YoY
  5. PAT ₹358 Cr +25%YoY
  6. CNG Sales Volume (ex-DTC) — +10%YoY
  7. PNG Sales Volume 2.5 MMSCMD/day +5%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

SegmentVolumeShare of Total
Delhi (CNG+PNG)5.43 MMSCMD56%
Noida/Ghaziabad2.24 MMSCMD23%
Newer GAs1.26 MMSCMD13.5%

Capital allocation

high confidence
  • Capex ₹1,250 Cr
    • PNG Network ₹190 Cr
    • Steel Network ₹190 Cr
    • CNG Infrastructure ₹116 Cr
    • MDP Network ₹560 Cr
    Actually till now up to 9 months is around INR190 crores. Sorry, PNG is INR190 crores. Steel network is INR190 crores and CNG is INR116 crores. MDP is INR560 crores so total, we have spent around INR847 crores in 9 months.

Guidance & targets

Volume

  • Average Daily Sales Volume Volume · Exit FY26 · High confidence 10 MMSCMD
    Yes, we maintain the guidance that, as you know, the CGD sector, the last quarter is the best sector. The quarter 4 of any year, you pick up any year, that is the best sector. Until now, we have performed the average has been 9.43 MMSCMD, but we have been constantly going above 10 million per day. The draw from all the sellers is exceeding 10 million. So we will be exiting the quarter at 10 million that we are confident.

    — Kamal Kishore Chatiwal

  • Annual Volume Addition Volume · Next 2 years (per year) · High confidence 1 million SCM
    Actually, our guidance has been that every year, we will be adding 1 million, so 9 million to 10 million. And next 2 years, I think 1 million each in the next 2 years.

    — Kamal Kishore Chatiwal

Volume Growth

  • Delhi Volume Growth (post-DTC) Volume Growth · After DTC impact is away · High confidence 8-10%
    I mean, Delhi will continue at 8% to 10% after once the impact of DTC is away.

    — Kamal Kishore Chatiwal

  • NCR Zone and Outside Volume Growth Volume Growth · High confidence 17-18%
    So 8% to 10% would be the NCR zone and outside would be 17% to 18%.

    — Kamal Kishore Chatiwal

EBITDA Margin

  • EBITDA Margin per SCM EBITDA Margin · Going forward · Medium confidence 7%
    So combined all this, we are seeing that we should be near to 7% going forward. And if required any adjustment in prices. The long-term guidance remains that 7% to 8% is our target range.

    — Kamal Kishore Chatiwal

Capex

  • Core Business Capex Capex · Annually · High confidence INR1,200-1,500 crores
    So our aspiration or our targets are like that only to around INR1,200 crores to INR1,500 crores in the core segment.

    — Mohit Bhatia

  • Diversification Capex Capex · Annually, from FY27 onwards · High confidence INR500-800 crores
    Actually, we will be adding the diversification capex, BD capex, that will be other than the core business. So that INR500 crores to INR800 crores, that will be separate, I mean, into renewables, into CPG, into LNG Infra. So those will be separate. ... I think from '27, they should start reflecting because the JV formation and subsequently, the cash costs and all will take some time. So from '27 onwards, they should start reflecting.

    — Sanjay Kumar

CNG Stations

  • New CNG Stations Added CNG Stations · Per year for next 3-5 years · High confidence 80-100 stations
    So roughly around 80 to 100 CNG stations we are targeting year-over-year for maybe roughly next 3 years to 5 years.

    — Mohit Bhatia

Sourcing Mix

  • RLNG vs Domestic Gas Mix Sourcing Mix · Going forward · High confidence 50% RLNG, 50% Domestic
    Going forward, we anticipate that right now, 42%, 43% is RLNG. It should -- it will be 50-50, 50% RLNG and 50% from domestic sources, including HPHT, new well gas and APM.

    — Kamal Kishore Chatiwal

Landed Price

  • Landed Gas Price Landed Price · High confidence 12% of Brent
    Our guidance to them has been that 12% of Brent should be the landed price for us.

    — Kamal Kishore Chatiwal

Commercial Vehicle Gas (CVG)

  • CVG Contribution Commercial Vehicle Gas (CVG) · In 1 year or so · Medium confidence 5-10%

    From 1% today

    Immediately, I mean, it will take 1 year or so to be going from 1% to 5%. So 5% to 10%, if we are able to do that will have a material impact.

    — Kamal Kishore Chatiwal

International Sales Potential

  • Middle East Sales Potential International Sales Potential · Long-term · High confidence 6 million
    And each industrial city in our assessment is going forward would be around 1.5 million. So we are looking at 4 now. So 6 million total is the long-term sales potential there.

    — Kamal Kishore Chatiwal

What to watch in Q4 FY26

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

  • DTC/DIMTS Fleet Transition

    medium

    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

  • Gas Cost Volatility & Forex Impact

    medium

    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

  • CGD Sector M&A Hurdles

    medium

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

    Management acknowledged

  • GRAP Implementation

    low

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

    Management acknowledged

  • New Labour Code Provisions

    low

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

    Management acknowledged

Q&A highlights

7 direct
DTC Bus Phase-out Impact on CNG Volumes Direct
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

EBITDA Margin Guidance and Drivers Direct
First is the transmission tariff. So the total impact, if you know, for the entire sector was around 1,000 crores. And out of that, IGL share was INR330 crores. Now we have passed on some of the benefit to the consumers, but we are still left with INR260 crores. So that should translate to approximately INR0.75 per SCM. ... Second is as the Gujarat VAT was implemented only in December, so we could realize only the part. So that impact is around INR0.20, INR0.25. ... Third is the Labour Code that was implemented. So we had to make certain provisions. That is a onetime provision. ... Going forward, it may not be that high. So that is around INR0.30 extra. So combined all this, we are seeing that we should be near to 7% going forward.

Provides a detailed breakdown of the components expected to boost EBITDA margins from current INR5.4/SCM towards the INR7/SCM target, attributing specific values to regulatory changes.

Asked by Yogesh Patil

Gas Sourcing Breakup Direct
So if you see our overall procurement was 9.75 MMSCMD out of that APM was 3.38 MMSCMD. NWC was 0.57 million cubic meters per day. HPST was around 0.5 and RLNG rest was RLNG around 3.3. In percentage terms, if I say, domestic was around 43%, NWG 7%, HPST 6% and 42% for RLNG.

Gives a clear picture of the company's gas procurement mix, which is crucial for understanding cost structures and exposure to different pricing mechanisms.

Asked by Yogesh Patil

Volume Growth in NCR vs New GAs Direct
So Delhi, as you know, it is almost flat, you can say half to 1%. Noida, Ghaziabad is growing at around 6.2%, whereas the outside or the new GS is contributing to almost 17% growth.

Highlights the differential growth drivers, with newer geographical areas showing significantly higher growth compared to mature markets like Delhi.

Asked by Nitin Tiwari

Impact of GRAP Implementation on Q3 Volumes Direct
Actually, in this quarter, in Delhi, as you know, the GRAP implementation was there. The schools were shut down for a few days. I mean this time, the pollution was really bad. So schools, the buses were off the roads. So those were the major impacts due to this, the quarter 3 was slightly other than the DTC also, the buses volumes were down.

Explains a temporary, non-recurring factor that suppressed Q3 volumes beyond just the DTC phase-out, providing context for the lower-than-expected growth in mature regions.

Asked by Nitin Tiwari

Middle East Tender Participation & Potential Direct
Yes, we have qualified for Stage 1, and we have been given the tender for Phase 2. So there, I think we are in the process and bid submission is April '23. So we'll be participating in that, and it looks a very good opportunity, in the sense that it is a very planned kind of a thing that with CGS is only at a 500-meter distance and the industrial cities are planned. ... Long-term sales potential there [is] 6 million.

Reveals IGL's international expansion ambitions and the significant long-term volume potential from a new geography, indicating future growth avenues.

Asked by Devang Patel

M&A and Industry Consolidation Hurdles Partial
Actually, this is a regulated license kind of a business. So here, unless some regulations are modified and facilitated for these mergers and acquisition, it will be very difficult because all those GAs will be carrying huge penalties, and that will deter the potential buyers. And unless something is thought on those lines, but how do we make it possible.

Explains the regulatory hurdles and financial disincentives (penalties) that currently prevent consolidation in the CGD sector, despite management acknowledging its necessity for growth.

Asked by Somaiah

Overall Capex for FY27 Direct
INR2000 crores you can say. INR1,200 crores, INR1,300 crores and INR600 crores, INR700 crores diversification.

Provides a clear, quantified outlook on the company's capital expenditure plans for the next fiscal year, differentiating between core business and diversification.

Asked by Probal Sen

3 min read 7 chapters

Detailed narrative

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.

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.

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%.

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.

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.

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.

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.

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