Indraprastha Gas down 10% on EV policy; MFs, insurers take a Rs 681-cr hit in value

Nearly 25 mutual funds collectively hold around 67.74 million shares or 9.68 percent stake in IGL

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26 Aug, 2025 12:21

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Shares of Indraprastha Gas Ltd lost more than 10 percent on October 20 after the Delhi government approved the electric vehicle policy for cab aggregators and delivery services. This resulted in mutual funds and insurance companies holding the stock losing over Rs 681 crore in value.

Nearly 25 mutual funds collectively hold around 67.74 million shares or 9.68 percent stake in IGL as of the September quarter, according to the BSE shareholding pattern. These MFs includes, Kotak Fexicap Fund growth, Mirae Asset Emerging Bluechip Fund, PGIM India MidCap Opportunities, Nippon India Growth Fund, HSBC MidCap fund, DSP Equity Opportunities Fund, and HDFC Lrge and MidCap fund.

Around 20 insurance companies collectively own 77.30 million shares, representing an 11.04 percent stake in the firm. Life Insurance Corp Ltd, India's largest insurance company, incurred a loss of over Rs 200 crore due to the stock's decline. It holds around 45.41 million shares, equivalent to a 6.49 percent stake in the company.

Jefferies India downgraded IGL to 'hold' from 'buy' and lowered the target price by 3 percent to Rs 465 on an anticipated decline of 30 percent in volume by FY25, particularly in the NCR. The Delhi-NCR impacts 88 percent of IGL's volumes. Jefferies also downgraded FY25/26 EPS by 7-9 percent and adjusted the valuation multiple because of increased EV-related risks.

In a bearish scenario, they foresee a 21 percent reduction in target price to Rs 380 per share. This could occur if electric vehicle adoption is successful by 2024-25, leading to a decrease in CNG volume growth starting in FY24, along with factors such as cost advantages for domestic CNG gas and competition from third-party marketers in Delhi-NCR, affecting profit margins in a regulated gas sales environment.

The Delhi government has proposed an EV policy for cab aggregators, delivery services, and e-commerce companies. It's pending approval from the Lieutenant Governor. The policy mandates a gradual transition to electric vehicles, aiming for 50 percent new EV purchases within three years and 100 percent within five years from the notification. By April 1, 2030, all aggregators must operate with an all-electric fleet.