Indraprastha Gas Limited — Q4 FY25 earnings call

Call held 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

  • 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

  • Domestic Gas (APM) Allocation Cuts

  • Regulatory Ban on CNG Vehicles

Key financials

  1. Gross Turnover ₹4,323 Cr +5%YoY
  2. EBITDA ₹497 Cr +37%QoQ
  3. PAT ₹349 Cr +22%QoQ
  4. EBITDA per SCM ₹6.03 +38.9%QoQ
  5. Average Daily Volume 9.18 MMSCMD +0.8%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

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

Guidance & targets

Volume

  • Total Sales Volume Growth Volume · FY26 · Medium confidence 10%

    Previously 9.5 MMSCMD → 10%

    we can plan to achieve sales volume increase of 10% in the year 2025-'26.

    — K. K. Chatiwal, Managing Director

Margin

  • EBITDA per SCM Margin · next 1-2 quarters · Medium confidence 7-8
    we anticipate that we will be in the 6 to 7 range for 1 or 2 quarters and then target for 7 to 8.

    — K. K. Chatiwal, Managing Director

Capex

  • Total Capital Expenditure Capex · FY26 · High confidence ₹2,000+ crores

    From ₹1,100 crores today

    for the coming year, it waves around Rs. 2000 plus crore is the CAPEX plan

    — K. K. Chatiwal, Managing Director

Capacity

  • New CNG Stations Capacity · FY26 · High confidence 90-100

    From 72 today

    We have taken a target of around 90 to 100. So in this range, we will be targeting.

    — K. K. Chatiwal, Managing Director

Risks & concerns

  • Domestic Gas (APM) Allocation Cuts

    high

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

    Both acknowledged

  • Regulatory Ban on CNG Vehicles

    high

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

    Analyst acknowledged

  • DTC Fleet Electrification

    medium

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

    Management acknowledged

Areas of evasion (2)

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

Q&A highlights

2 direct
Gas Sourcing Mix and APM Cuts Direct
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

Impact of Delhi EV Policy 2.0 Partial
we have given our submission to the Delhi government that gas... should be categorized as a bridge fuel... and not to be clubbed with the other petrol and diesel fuels.

Highlights the regulatory risk of potential bans on non-EV commercial vehicles in Delhi and IGL's lobbying efforts.

Asked by Yogesh Patil, Dolat Capital

DTC Volume Attrition Direct
some of the DTC buses are going off... from 1.8, 1.9 levels, they are now at 1.1. So you can say that that is the reduction.

Quantifies the significant volume loss from the shift of Delhi's public bus fleet to electric, which IGL must offset with other segments.

Asked by Yogesh Patil, Dolat Capital

2 min read 4 chapters

Detailed narrative

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.

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.

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.

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.

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