2 days Ago
Shares of Indraprastha Gas Ltd. (IGL) will be in focus on Monday, April 7, after the natural gas distribution company announced a price hike for Compressed Natural Gas (CNG) by ₹1-3 per kilogram. In Delhi, the price has been raised by ₹1 per kg, while in other markets, the hike is ₹3 per kg.
This marks the first CNG price increase in the Delhi market since June 2024. Delhi accounts for 70% of IGL's total CNG sales, with the remaining 30% coming from other markets. Following the revision, CNG is now priced at ₹76.
09 per kg in Delhi, and ₹84.70 per kg in Noida and Ghaziabad. In November 2024, IGL had hiked price for markets other than Delhi.
Brokerage firm Jefferies, in a February note on IGL, mentioned that a price hike of ₹2 per kg would be enough to maintain current margin levels. The price revision comes shortly after the government announced a 4% increase in gas prices under the Administered Price Mechanism (APM). The APM gas prices have been fixed as $6.
75 per mmBtu for the period of April to September this year. For the first three months of the year, the prices remained steady at $6.5 per mmBtu.
This is the first increase in the APM gas price since April 2023 and is in-line with the recommendations made by the Kirit Parikh panel. As per the recommendations of the panel, which were put in place from April 2023, there was a provision to increase the prices of gas by 4% from the third year of implementation. It remains to be seen how beaten down names like IGL and MGL react to the price hike.
As of last Friday's close, shares of IGL were still down 30% from their peak, while those of MGL were down 33%..
