IRM Energy — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

IRM Energy reported robust Q3 FY26 performance with strong EBITDA growth and margin expansion, driven by an improved customer mix and operational efficiencies. The company is aggressively expanding its CNG infrastructure and PNG connections, particularly in new GAs like Namakkal and Trichy, with a substantial Capex plan. While facing challenges in industrial volume in Fatehgarh Sahib and a continuing license fee to promoters, management expressed confidence in future growth and profitability through strategic sourcing and infrastructure development.

Highlights

  • 9M FY26 Revenue of ₹787 crores, up 11% YoY, reflecting operational efficiency and gas sourcing improvements.

  • Q3 FY26 EBITDA of ₹30 crores, up 34% YoY, driven by improved customer mix with CNG contributing 61% of operating revenue.

  • Commissioned 11 new CNG stations and took over 5 IOCL CNG stations in Q3 FY26, with a target to reach 150+ stations by March 31, 2026.

  • PNG Commercial and Domestic segments delivered strong volume growth of 21% and 25% YoY respectively in 9M FY26.

  • Strong balance sheet with cash and bank balance of ₹255 crores+ and a term loan of only ₹54 crores.

Concerns

  • Industrial sales volume in Fatehgarh Sahib GA declined 7% YoY in 9M FY26 due to units switching to coal/liquid fuel, impacting overall volume growth.

  • The 2% license fee on gross revenue (post excise adjustment) to the promoter trust continues, impacting profitability compared to peers.

  • Operating margins are currently lower than more matured industry peers, attributed to ongoing significant Capex in evolving GAs.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹265 Cr
    YoY +6%
  • EBITDA
    ₹30 Cr
    YoY +34%
  • EBITDA Margin
    11.2%
  • Capex
    ₹35.51 Cr

9M FY26

  • Revenue
    ₹787 Cr
    YoY +11%
  • EBITDA
    ₹82 Cr
    YoY +4%
  • EBITDA Margin
    10.4%
  • Total Capex
    ₹103 Cr

What they filed

Q1 FY27: revenue up 24.4%, net profit up 142.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue232 251 268 262 259 +12%265 +6%280 +4%326 +24%
EBITDA26 22 17 26 27 +4%30 +36%30 +76%62 +138%
Net profit12 10 4 14 13 +8%14 +40%13 +225%34 +143%
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 Business
    61% Contribution to Operating Revenue0.21 decimal_fraction Volume Growth (YoY)
  • PNG Commercial
    0.21 decimal_fraction Volume Growth (9M FY26 YoY)
  • PNG Domestic
    0.25 decimal_fraction Volume Growth (9M FY26 YoY)
  • PNG Industrial (Banaskantha GA)
    0.19 decimal_fraction Volume Growth (9M FY26 YoY)
  • PNG Industrial (Fatehgarh Sahib GA)
    -0.07 decimal_fraction Volume Growth (9M FY26 YoY)

Capital allocation

high confidence
  • Capex ₹35.51 Cr this quarter · ₹103 Cr (9M FY26) planned
    • Infra development in Namakkal and Trichy ₹250 Cr
    • Infra development in other three GAs (Banaskantha, Diu & Gir Somnath, Fatehgarh Sahib) ₹50 Cr
    Company has incurred Capex during this period INR 35.51 crore in Q3 FY26, which adds to the total Capex for the year in nine months to INR 103 crore. This is our ongoing Capex program, which is going to accelerate further. IRM has strong balance sheet with a term loan of only INR 54 crore and cash and bank balance of INR 255 crore plus. (Page 4) / We can share with you more than INR 200 crore we'll be spending in coming 1.5 years, more than INR 250 crore rather, you can say, to be more precise. We have plans and capital allocation is complete in our board's mandate with us. So that we are planning that in next 15 to 18 months, INR 250 crore will be dedicated to infra only in Namakkal and Trichy. (Page 11) / So, going forward, the other three GAs will be around, say, INR 50 to INR 70 crore in the range because the BK and FS are almost, like, stabilized one. BK will require some CapEx because there is potential there. So, that way, the plan is there. (Page 27)
  • Debt Gross ₹54 Cr
    IRM has strong balance sheet with a term loan of only INR 54 crore and cash and bank balance of INR 255 crore plus. (Page 4) / So in Namakkal and Trichy, in the next one and a half years, we do not expect any debt to be drawn. We will be using the IPO money. In case of the other three GAs, right now, our debt is around INR 54 crore. Further, INR 50 crore debt arrangement is also in place. Going forward, our debt size is expected to be around INR 75 crore, running debt. (Page 27)
  • Liquidity Cash ₹255 Cr · Undrawn ₹50 Cr Sufficient funds from IPO money and existing debt arrangements to cover planned Capex.
    IRM has strong balance sheet with a term loan of only INR 54 crore and cash and bank balance of INR 255 crore plus. (Page 4) / For Namakkal and Trichy, we already have a loan tie up. But apart from that, IPO money is also there. For other three GAs, we have a loan tie up of -- INR 50 crore is still to be drawn. So, fund-wise, we are comfortable. (Page 27)

Guidance & targets

Volume

  • Overall Volume Growth Volume · FY26 · High confidence 10-12%
    So, we estimate that we should be going by 10% to 12% range by the end of this year.

    — Arunkumar Salaru

  • Overall Volume Growth Volume · FY27 · High confidence 12-15%
    And for the next year also, we'll be growing at 12% to 15%.

    — Arunkumar Salaru

  • Namakkal & Trichy Average Sales per SCMD Volume · 1.5-2 years · Medium confidence 2,500 range

    From 1,000 today

    As I expect, it should not take more than two years' time to enhance our volume of 1,000 to increase to 2,500 range average.

    — M. K. Sharma

Profitability

  • Operating EBITDA per SCM Profitability · FY26 & FY27 · High confidence 5.25 to 5.5 rupees
    So, going forward, EBITDA guidance can be 5.25 to 5.5 rupees per SCM operating EBITDA, Pawan. ... This will be close of this year. And for the next year also, we'll be growing at 12% to 15%.

    — Arunkumar Salaru

Capacity

  • CNG Stations Capacity · by March 31st (FY26 end) · High confidence 150+

    Previously 111 → 150+

    This time, we will be crossing 150-stations landmark also. As you may recall that March, we had ended with 111 stations only, but we'll be ending most likely by March 31st, 150-plus stations in our kitty.

    — M. K. Sharma

Capex

  • Infra Capex in Namakkal & Trichy Capex · next 15-18 months · High confidence 250 crores
    We have plans and capital allocation is complete in our board's mandate with us. So that we are planning that in next 15 to 18 months, INR 250 crore will be dedicated to infra only in Namakkal and Trichy.

    — M. K. Sharma

Debt

  • Running Debt Size Debt · going forward · High confidence 75 crores

    Previously 54 crores → 75 crores

    Going forward, our debt size is expected to be around INR 75 crore, running debt.

    — Arunkumar Salaru

What to watch in Q4 FY26

Fatehgarh Sahib NGT Judgment Outcome

next quarter
Current Pending (expected Jan/Feb 2026)
Target Favorable judgment leading to industrial volume recovery

Why it matters

Resolution of the NGT case is crucial for restoring industrial natural gas demand and volumes in the Fatehgarh Sahib GA, which currently faces a 7% YoY decline.

So, the judgment is expected anytime in the early January or February. If the judgment comes, then Punjab Government and Punjab Pollution Control Board, including the CPCB should definitely come to our fold. I mean, with their notifications and all that. So, the sales volume, around 207 connections we have given to various industry. And currently, 125 around are continuing with NG.

Risks & concerns

  • Industrial Volume Decline in Fatehgarh Sahib

    high

    Industrial units in Fatehgarh Sahib GA switched from natural gas to coal/liquid fuel, causing a 7% YoY decline in industrial sales volume for 9M FY26 and a 7-8% hit to total volume. Resolution depends on a pending NGT judgment and state government intervention.

    Management acknowledged

  • Reduced APM Gas Allocation

    medium

    Government APM allocation for CNG has substantially reduced from 80-100% to ~37%, and further reduction to 26-27% is expected, requiring the company to rely more on market-based sourcing.

    Management acknowledged

  • License Fee to Promoter Trust

    medium

    A 2% license fee on gross revenue (post excise adjustment) is paid to the promoter trust, which is a structural cost and impacts operating margins compared to peers. Management has requested reconsideration but it continues.

    Analyst acknowledged

  • JV Underperformance and Auditor Observations

    medium

    Issues with existing JVs, including a CBG plant shutdown due to farmer agitation and lower off-take from Venuka Polymers, have led to auditor observations and potential provisioning, indicating risks in these investments.

    Analyst acknowledged

Q&A highlights

6 direct
Operating Margins vs. Industry Peers Direct
If you see sourcing area, I will not admit that we have been poor in sourcing. Rather, we are most one of the efficient player in sourcing. Gross margin, if you see, gas cost with the revenue cost, we are 25%, 26% range, which is very good considering our size of bargaining power in the market. ... Secondly, you will see that we are evolving GA. We are doing a lot of CapEx in Namakkal and Trichy. We are also adding more stations in Banaskantha, Diu and Gir Somnath, everywhere. So, because of CapEx, since we are evolving and the companies which you are comparing, they are already matured companies, wherein, either the entire assets haven't fully depreciated or very well depreciated.

Analyst challenged the company's lower operating margins compared to peers, prompting management to explain the difference due to its evolving GA status and ongoing Capex cycle versus matured competitors.

Asked by Keshav Garg

Fatehgarh Sahib Industrial Volume Decline and NGT Case Direct
As you understand, there is a PIL under consideration of NGT, which we are also monitoring from outside. That PIL has traveled for more than two years, wherein the subject matter is that the ambient air and the quality of the entire region of Fatehgarh Sahib, which is Sirhind area, is getting highly polluted because massively the steel industry and other galvanizing industry, etc., they have been getting fuel through natural gas, their furnaces. They have surrendered the connections and they have come to coal. ... So, the judgment is expected anytime in the early January or February. If the judgment comes, then Punjab Government and Punjab Pollution Control Board, including the CPCB should definitely come to our fold.

This question highlighted a significant volume decline in a key industrial GA, revealing a dependency on a pending NGT judgment for recovery and future growth in that region.

Asked by Abhir Pandit

License Fee to Promoter Trust Direct
License fee continues to be there, because the IRM Trust is our sponsor. I mean, they are our promoters. So, they have been taking 2% of the gross revenue post excise adjustment as a license fee. That is continuing. And this, we have very widely and openly discussed in our IPO documents also that this continues to be there. And the request has moved from the management to the promoters also if they can consider or reconsider. But currently, as of now, to be very open and precise, I can only share with you this is still continuing.

The analyst sought clarification on a recurring charge to the promoter trust, which management confirmed is ongoing despite internal requests for reconsideration, indicating a structural cost.

Asked by Kiran Gadge

Namakkal & Trichy Volume Ramp-up Timeline Direct
As I expect, it should not take more than two years' time to enhance our volume of 1,000 to increase to 2,500 range average. It should not take more than one and half to two years, simply because the LPG culture used to be prevalent in three wheelers. ... And in Namakkal and Trichy only, Indian Oil, we have entered the MOU. As we mentioned in the initial inaugural address to you, four stations of CBG, they have transferred to us, and we'll be running CNG stations. ... And also, we would like to say that in Tamil Nadu, we have entered another MOU with Tamil Nadu State Transport Corporation, and they have converted around 80 buses for refueling with us.

This question provided specific timelines and strategic initiatives (MOUs, promotional schemes) for ramping up volumes in new, high-potential GAs, crucial for future growth.

Asked by Pawan Kumar

Gas Sourcing Mix and Costing Strategy Direct
from CNG segment, we are filling our entire requirement through APM, which we mentioned to you that 41% is coming from APM. NWG is coming around 7.5%, and HPHT is again, 38.4%. So, in total, you can see that 85% is around getting through my domestic sources, which is feeding us the CNG segment, PNG is definitely domestic, 100% we are getting. ... GSPC and Shell up to 2028 January and 2028 March, they are providing us HPHT gas. So, you can understand that our portfolio is highly efficient and that HPHT gas is also good enough in the current prices as far as the costing part is concerned.

The analyst probed the company's gas sourcing strategy, leading to a detailed breakdown of the mix and an explanation of how they manage costs and ensure supply stability through long-term contracts and market intelligence.

Asked by Dhruv Lawani

Issues with Joint Ventures and Auditor Remarks Direct
CBG plant, we had a 50-50 joint venture, namely in farm gas in Khanna and Ludhiana area, which was a big source for our Fatehgarh Sahib. So that CBG plant, because of the local farmer agitation and all that, remained under shutdown for some time. ... And coming to Venuka, the other company as a backward integration, Venuka Polymers in Vadodara, and that another plant of Venuka Polymers is there in Bangalore also. ... So, certain provisioning auditors have demanded. That provisioning, we would be making if it is in the management side also not to be pursued like that.

This question revealed challenges with existing JVs, including operational shutdowns and underperformance, leading to auditor observations and potential provisioning, highlighting risks in certain investments.

Asked by Dhruv Lawani

3 min read 7 chapters

Detailed narrative

Q3 & 9M FY26 Financial Performance Overview

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.

Strategic Expansion in CNG & PNG Segments

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.

Aggressive Capex and Infrastructure Development in New GAs

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.

Optimized Gas Sourcing Strategy

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.

Challenges in Fatehgarh Sahib Industrial Volume

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.

Management Rejig and Operational Efficiency Focus

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.

Joint Venture Performance and Auditor Observations

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.

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