Mahanagar, Indraprastha shares surge on forecast of robust demand from gas distributors

Despite lower gas consumption in 2022, the report expects demand to growth to be strong in 2023 due to falling spot prices of liquefied natural gas.

Shares of city gas distributors (CGD) surged on April 5 after a report by a brokerage firm forecast robust consumption over the next two years.

Gas demand from CGDs is expected to rise by 100 million metric standard cubic meters per day by 2030, brokerage firm Anand Rathi said in a report. “We believe gas demand in the country will be strong over FY23-25, supported by strong gas infrastructure,” it said.

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At 2.09pm, the stocks of Mahanagar Gas Ltd (MGL) and Indraprastha Gas Ltd (IGL) were trading 3.8-4.7 percent higher at Rs 955.85 per share and Rs 440.40 apiece, respectively.

Despite lower consumption in 2022, the report expects gas demand growth to be strong in 2023 due to falling spot prices in liquefied natural gas. “Power sector demand has fallen due to higher gas prices, while the share of CGD continues to be strong, despite a drop in industrial sector demand,” the brokerage said.

In the last one year, the stock price of IGL has surged as much as 13 percent, while in the last three years, it has fetched a return of more than 8 percent.

In the case of MGL, the stock price has shot more than 15 percent in the last three years and delivered a return of more than 15 percent in the last one year.

On Friday, the government said that it will provisionally keep the price of locally produced gas from old fields at $8.57 per million metric British thermal units (mmBtu), while it considers a potential change to the pricing formula. The ceiling has been reduced marginally to $12.1 from $12.5 per mmBtu.

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