Indraprastha Gas extends losses after distributor cuts CNG price

Antique Stock Broking remains cautiously positive on the sector as CNG arbitrage vs. petrol/ diesel vehicles remains attractive. Gujarat Gas is our preferred pick in the space while we maintain HOLD on IGL and MGL.

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26 Aug, 2025 12:21

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After an over 6 percent decline in the previous session, shares of Indraprastha Gas Ltd (IGL) fell over 3 percent to extend losses on March 7 as well, since the city gas distributor slashed the prices of compressed natural gas (CNG) by Rs 2.5 a kilo in Delhi and the National Capital Region (NCR).

The move comes a day after state-run Mahanagar Gas (MGL) also cut the CNG prices by Rs 2.5 per kg due to a dip in gas input costs.

Antique Stock Broking said in a recent report that CNG adoption remains largely stable for CGDs with private vehicles showing strong adoption (except in February) offset by poor three-wheeler vehicles and buses. Goods vehicle adoption remains a key monitorable from hereon for volume growth to resume in the sector, it said

“Margins remain broadly stable. We are cautiously positive on the sector as CNG arbitrage vs. petrol/ diesel vehicles remains attractive. Gujarat Gas is our preferred pick in the space while we maintain HOLD on IGL and MGL,” the brokerage said.

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The IGL shares closed at Rs 430.35 on the National Stock Exchange (NSE), down 6.15 percent from the previous close. In the last one year, the stock has lost over 3 percent, underperforming benchmark Nifty 50 which has risen around 26 percent during this period.

Incred Equities has an 'add' rating on the stock with a target price of Rs 539 as it believes that higher APM gas allocation to city gas distribution (CGD) companies presents a favorable scenario and brings potential benefits to the city gas distribution sector (CGD) sector.

Following MGL's price cut move, MGL stocks on March 6 plunged 15.3 percent to close at Rs 1,324.70 on the National Stock Exchange. Citi has downgraded the stock to sell and cut the target price to Rs 1,405, expressing concerns about exclusivity and margins. The brokerage is closely watching potential downside catalysts over the next 90 days.

Nuvama believes that MGL will likely continue to re-rate given the discounted valuation to long-term average (-1SD PE/PB) amid healthy demand, and expansion to new GAs. It is debt-free with high cash of Rs 2 lakh crore-plus and a dividend yield of 3 precent, hence the brokerage reiterated 'buy' rating on the counter with a target price of Rs 1,601 per share.

Also Read | IGL reduces CNG prices in Delhi by Rs 2.5/kg to Rs 74.09/kg

Earlier this week, Oil Minister Hardeep Puri informed the Rajya Sabha that the government is making constant efforts to bring the prices of compressed natural gas under control and has delinked Indian gas prices from four international hubs based in the US, Canada, the UK and Russia, and aligned them to the Indian crude basket.

The reduction in CNG price would help to increase the consumption of natural gas in the transportation segment, which is a step towards making India cleaner and greener, it added.

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