Detailed Narrative
Q4 FY26 Operational and Financial Performance
Mahanagar Gas reported an overall average sales volume of 4.672 mmscmd in Q4 FY26, marking a 1.12% increase QoQ and a 6.13% increase YoY. CNG sales volume grew by 7.16% YoY to 3.349 mmscmd, while domestic DPNG sales increased by 2.37% YoY to 0.605 mmscmd. Industrial and commercial sales saw a 4.81% YoY increase to 0.719 mmscmd. Despite volume growth, net profit after tax for the quarter was INR132 crores, a decline from INR202 crores in the previous quarter.
FY26 Annual Performance Highlights
For the full financial year 2026, Mahanagar Gas achieved an average gas sales volume of 4.585 mmscmd, an 8.26% increase over FY25. CNG sales volume grew by 7.00% to 3.26 mmscmd, domestic PNG by 6.11% to 0.590 mmscmd, and industrial and commercial volumes by 15.03% to 0.727 mmscmd. However, EBITDA from operations for FY26 stood at INR1,451 crores, down from INR1,570 crores in FY25, and net profit after tax was INR847 crores, compared to INR1,041 crores in the prior year.
Impact of Geopolitical Crisis and Supply Disruptions
The company faced significant challenges due to supply disruptions arising from the geopolitical crisis in Iran and the wider Gulf region, impacting LNG facilities and the global LNG supply chain. This led to the curtailment of gas supplies to industrial and commercial customers by approximately 80%. While domestic gas production supports 100% of DPNG and a major part of CNG requirements, the disruption has affected volumes and may impact prices in the near term, though improvement is expected over time.
Infrastructure Expansion and Customer Connectivity
MGL continues to expand its CGD infrastructure, connecting 1,43,997 domestic households in Q4 FY26, bringing the total to nearly 3.21 million. The company laid 138.48 kilometers of steel and PE pipeline, increasing the total length to over 8,320.43 kilometers. Additionally, 28 new CNG stations were added in Q4 FY26, reaching a total of 518 stations. For the full year, 3,42,157 domestic households were connected, 499 kilometers of pipeline laid, and 52 CNG stations added.
Pricing Strategy and Margin Management
In response to increased gas costs, MGL implemented a price hike of INR1 for domestic PNG on April 22, 2026, which largely covers the cost increase. For CNG, however, the company has not fully passed on the cost increases due to short-term volatility and the desire to maintain stable pricing. Management aims to maintain EBITDA per SCM above INR8 in the long run, leveraging higher Brent-linked realizations in the industrial and commercial segments.
Volume Growth Outlook and Regulatory Support
The company is positive about future volume growth, aiming for double-digit overall growth if current conditions persist, and 10% if customer additions accelerate. Regulatory changes, such as eased CGD functioning, faster permissions, and reduced road reinstatement charges, are expected to boost volumes, especially for PNG. The government's push for faster adoption of PNG due to LPG supply issues also presents a significant opportunity for MGL to increase its volumes.
Capital Allocation and Shareholder Returns
MGL's Board approved a final dividend of INR18 per equity share, bringing the total dividend for FY26 to INR30 per share, including the interim dividend of INR12. For FY27, the company anticipates a capex spend in the range of INR1,200 crores, focusing on infrastructure development. Management indicated that while margins are important, the current focus is also on increasing infrastructure and volumes, seizing growth opportunities.