1 week Ago By CNBCTV18
Shares of Indraprastha Gas Ltd. (IGL), Mahanagar Gas Ltd. (MGL) and Gujarat Gas Ltd.
have recovered from the lows of the day with IGL outperforming its peers after a new government order with regards to the supply of LPG to these companies. Share Market View All Nifty Gainers View All Company Value Change %Change The government has asked GAIL and ONGC to allocate the LPG Shrinkage to these City Gas companies in a phased manner. Out of the total 2.
55 mmscmd, 1.27 mmscmd will be allocated to these companies in the December quarter. Natural Gas will also be allocated to these companies based on their previous quarter consumption.
GAIL will not reduce allocation to these City Gas companies without approval from the ministry, according to the circular dated December 31, 2024. The circular also said that ONGC and GAIL will each divert 0.64 mmscmd of gas for CNG or PNG consumption to these companies.
In October and November last year, the Administered Price Mechanism (APM) gas allocation for transportation segment was cut to 45% from 70% earlier. In response, City Gas companies have already hiked prices by ₹1.5 per kg to ₹3 per kg.
Analysts who spoke to CNBC-TV18 said that the government order with regards to the diversion of gas is positive for these city gas companies and that this diversion should help companies restore volumes by up to 1.3 mmscmd. The analysts further said that the quantum of price cuts that companies need to take to maintain their existing margins has now come down to ₹6.
3 to ₹7.9 per kg from the earlier expectation of ₹8 to ₹10 per kg. Mahanagar Gas has already taken a price cut of ₹3 per Kg.
Analysts believe that this is a marginal negative for GAIL as its cost for the LPG segment may rise by 7%, while for ONGC, the impact should be marginal..
