Mahanagar Gas Limited

Mahanagar Gas reported an overall average sales volume of 4.62 MMSCMD in Q3 FY26, marking a 7.19% year-on-year increase from 4.31 MMSCMD. This growth was broad-based, with CNG volumes rising by 5.92% to 3.281 MMSCMD, domestic PNG by 9.04% to 0.604 MMSCMD, and industrial and commercial sales by 11.63% to 0.735 MMSCMD. For the nine months ended December 31, 2025, average gas sales stood at 4.556 MMSCMD, an 8.97% increase over the corresponding period last year.

In Q3 FY26, MGL continued its infrastructure build-out, connecting 124,908 domestic households, bringing the total to approximately 3.07 million. The company laid 120.3 kilometers of steel and PE pipeline, expanding its network to over 8,182 kilometers. Six new CNG stations were added, totaling 491 stations as of December 31, 2025. Additionally, 337 industrial and commercial customers were acquired, increasing the total to 5,618, and 32,315 CNG vehicles were registered, bringing the total to over 1.25 million in MGL's geographies.

EBITDA from operations for Q3 FY26 was INR 352 crores, an increase from INR 338 crores in the previous quarter. Net profit after tax also improved to INR 202 crores from INR 193 crores sequentially. Management noted that the overall company EBITDA per SCM increased by approximately INR 0.30, benefiting from a price increase in September and optimized gas sourcing. For the nine months, EBITDA was INR 1,191 crores and net PAT was INR 715 crores, with EBITDA per SCM at INR 9.5.

MGL actively manages its gas sourcing mix to mitigate the impact of Henry Hub (HH) price volatility. In Q3, the company reduced its reliance on HH-linked contracts, replacing them with HPHT or spot purchases. While the average HH Index increased by about $0.14, savings from lower Brent prices (around $0.20) for APM and NWG contracts helped offset this. MGL maintains flexibility to adjust drawdown from contracts and aims to postpone costlier gas intake when indices are high, with a long-term strategy of a diversified portfolio including Brent-linked contracts.

CNG growth in Mumbai remains muted due to two primary factors: the reduction in the BEST CNG bus fleet (down from 3,000 to a few hundred, resulting in a loss of about 1 lakh kgs per day) and challenges in securing land for new CNG stations. To counter this, MGL is focusing on large-format CNG stations. A major station in Sion/Wadala with 60 filling points is planned, with the first phase expected by April/May. Two large stations are also planned for South Mumbai on Bombay Port Trust land, with one opening in a couple of months, and another in Goregaon on Western Express Highway within 1-1.5 years.

The implementation of zonal unified tariffs from January 1, 2026, is expected to shift MGL's gas sourcing cost structure. Previously, 70% of gas was in Zone 1 and 30% in Zone 2. With the new system, MGL anticipates that at least 90% or more of its weighted average tariff will fall under Zone 1, with less than 10% under Zone 2, especially for industrial and commercial segments. The transportation cost per SCM may marginally increase by INR 0.10 to INR 0.20 under this new scenario.

MGL's battery cell manufacturing project, for which land is secured and technology is available, is currently under reassessment. Significant declines in global battery prices, particularly for cathode materials, have led the company to put the finalization of contractual arrangements on hold for a few months. MGL is exploring strategic partnerships to mitigate risks and ensure the project's viability under evolving market conditions. The Board had previously approved INR 380 crores for this project over two phases, to be spent over 12-18 months.