Gas distribution companies in focus; Indraprastha Gas up over 5%

Gujarat Gas, Indraprastha Gas and Gail India have rallied by more than 5% each on the BSE in intra-day trade.

Shares of gas distribution companies surged up to 8% on the bourses in noon deals after the Supreme Court on Wednesday banned the registration of new diesel luxury cars and sport utility vehicles with an engine capacity of over 2000 cc in Delhi until 31 March 2016.

The SC also directed that all taxis in the National Capital Region switch to compressed natural gas (CNG) fuel by March 31, 2016; this will apply to private taxis that operate through cab-hailing applications such as Uber and Ola. CLICK HERE TO READ FULL REPORT.

Gujarat Gas (up 11% at Rs 628), Indraprastha Gas (8% to Rs 508) and Gail (6% at Rs 360) have rallied by more than 5% on the BSE in intra-day trade.

The National Green Tribunal (NGT) on Friday in a hearing related to air pollution in Delhi directed1 as an interim measure until the next date of hearing (January 6, 2016) that diesel vehicles of more than 10 years of age as well as new diesel vehicles would not be registered in NCT, Delhi. It also directed the Central and the State Government (Delhi) not to purchase any diesel vehicle.

According to Ambit Capital, if this ban stays, it would be meaningfully positive for Indraprastha Gas (IGL). This is because consumers looking for lower per unit running cost of cars are likely to shift from diesel cars to CNG.

Delhi already has 26% of vehicles running on CNG. Government may also clamp down on fuel oil usage in commercial/industrial segment which could aid the volumes of PNG (piped natural gas), added report.

At 02:05 pm, IGL and Gujarat Gas up 7% each at Rs 502 and Rs 605 respectively, while Gail up 3% at Rs 350 on the BSE.