Mahanagar Gas shares plunge over 6% after APM gas allocation cut

Shares of Mahanagar Gas tumbled over 6 per cent on Wedneday, after the gas allocation under the Administrative Price Mechanisms (APM) was cut by 18 per cent, effective April 16. 

 

Mahanagar Gas' stock fell as much as 6.47 per cent during the day to ₹1,230 per share, the worst intraday session since November 18 last year. The stock pared losses to trade 5.28 per cent lower at ₹1,246.2 apiece, compared to a 0.17 per cent advance in Nifty 50 as of 9:58 AM. 

 

Shares of the company snapped two gains of gains on Wednesday.The counter has fallen 2.5 per cent this year, compared to a 1.2 per cent fall in the benchmark Nifty 50. Mahanagar Gas has a total market capitalisation of ₹12,258.8 crore, according to BSE data. 

 

The Reduction of APM volume has been replaced with new-well intervention gas (NWG), according to an exchange filing on Tuesday. This will have an "adverse" impact on the profitability, Mahanagar Gas said, adding that it is in the process of exploring all measures to mitigate the impact. 

 

A reduction in APM gas allocation could result into a higher input costs for city gas distribution (CGD) companies, which could then result in another CNG price hike by these firms. Companies may need to raise CNG prices by around ₹0.6 per kg to offset the increased cost, according to reports. The move comes after Indraprastha Gas and Mahanagar Gas had already initiated price hikes earlier this month. 

 

Meanwhile, shares of Adani Total Gas and Indraprastha Gas tumbled 1.6 per cent and 3.8 per cent respectively, on Wednesday.  

 

Accoridng to the press release, domestically produced APM natural gas will be allocated to CGD companies for priority segments, specifically Domestic PNG and CNG. The policy states that the supply of domestic gas to CGD entities will be made only up to the quantity available and allocated to GAIL (India) Limited for these segments.  

 

MGL distributes compressed natural gas (CNG) and piped natural gas (PNG) in Mumbai, Thane, and Raigad districts. Its products cater to domestic households, commercial establishments, and industrial use. MGL operates through an extensive network, with 348 CNG filling stations and over 6,000 kilometers of pipelines.