Multiple factors in favour of gas utility companies

Rupee appreciation and lower gas prices driving profitability

After posting a strong quarterly performance, Indraprastha Gas (IGL), Gujarat Gas and Mahanagar Gas are well-placed to clock robust growth in the coming years. While low gas prices are supporting demand, together with rupee appreciation, the two factors are propping up margins. With companies continuing to expand distribution, it is fuelling top line growth.

Gujarat Gas posted a strong 19 per cent growth year-on-year (y-o-y) in volumes in the June quarter (Q1), which analysts attribute to better economics for gas usage versus coal/fuel oil for the Morbi-based ceramic makers, and revival in demand from chemical plants in the Vapi-Valsad-Ankleshwar region.