IRM Energy

IRM Energy reported a 9M FY26 revenue of ₹787 crores, marking an 11% YoY growth, with EBITDA at ₹82 crores, up 4% YoY. For Q3 FY26, revenue stood at ₹265 crores, a 6% YoY increase, and EBITDA surged by 34% YoY to ₹30 crores. The EBITDA margin for Q3 FY26 was 11.2%, reflecting improved operational efficiency and gas sourcing. The company incurred ₹35.51 crores in Capex during Q3 FY26, bringing the total for the nine months to ₹103 crores.

The CNG business remains a key revenue driver, contributing approximately 61% of the total operating revenue and achieving a 21% YoY volume growth. In Q3 FY26, 11 new CNG stations were commissioned, and 5 Indian Oil Corporation Limited (IOCL) CNG stations were taken over, with a target to exceed 150 stations by March 31, 2026. The PNG Commercial and Domestic segments also demonstrated strong growth, with 21% and 25% YoY volume increases respectively in 9M FY26. The company added 2,773 domestic, 18 commercial, and 4 industrial connections in Q3 FY26.

IRM Energy has committed ₹250 crores for infrastructure development in Namakkal and Trichy over the next 15-18 months, addressing the absence of a pipeline grid in these regions. This investment is part of an IPO mandate and aims to accelerate the adoption of natural gas. Additionally, ₹50-70 crores is planned for Capex in other GAs like Banaskantha and Diu & Gir Somnath. The company is also leveraging MOUs with IOCL for CBG stations and Tamil Nadu State Transport Corporation for converting 80 buses to natural gas, expecting Namakkal and Trichy volumes to reach the 2,500 range within 1.5-2 years.

To counter the reduction in government APM gas allocation (now around 37%), IRM Energy has diversified its sourcing mix. For 9M FY26, the mix included 41% from APM, 10.5% from NWG, and 38.4% from HPHT gas, with the remainder from long-term contracts. The company has competitive 5-year agreements with GSPC and Shell for HPHT gas until 2028 and is also exploring Henry Hub-linked liquid portfolios and spot purchases to maintain optimal pricing and supply stability.

The industrial sales volume in Fatehgarh Sahib GA experienced a 7% YoY decline in 9M FY26, primarily because steel and galvanizing industries switched from natural gas to coal or liquid fuels. This segment previously contributed 45% of total volume. The company is awaiting a judgment from the National Green Tribunal (NGT) on a Public Interest Litigation (PIL) regarding ambient air pollution, which management hopes will mandate a return to natural gas and restore volumes.

The company has undergone a significant management rejig over the past year, bringing in a fresh and professional team, including the CEO (1.5 years), CFO (9 months), and new heads for Project, Marketing, Commercial, and Strategy. This new team is focused on optimizing OpEx, with initiatives like solar group captive schemes reducing electricity costs from ₹8.5-9 to ₹3-4.5 per unit, contributing to improved profitability.

IRM Energy's investments in certain joint ventures, such as a CBG plant in Fatehgarh Sahib and Venuka Polymers (for CGD pipes), have faced challenges. The CBG plant experienced shutdown due to farmer agitation, and Venuka Polymers saw lower off-take due to reduced procurement by other CGD players. These issues led to auditor observations, with some receivables converted into intercorporate loans at 9% interest, and no further investments are expected in these JVs.