India imported about 80 per cent of liquefied petroleum gas (LPG) from West Asia before the war. Loss of that supply has been partly offset by liquefied natural gas (LNG) imports from US, Nigeria, and Angola. Imports from the US have risen by multiples, but total LNG imports in May were down 40 per cent year-on-year (Y-o-Y).
In industrial demand, the arbitrage favours gas over alternate fuels. CGDs may retain margins by partially rolling back hikes, after supply and prices normalise. But infra damage implies higher prices are likely, with possible LNG supply disruptions for at least 12-18 months.
In May, Indraprastha Gas (IGL) and Gujarat Energy (GEL) saw 27.2 per cent and 34.8 per cent Y-o-Y growth, respectively, in CNG registrations. Mahanagar Gas also posted a 1.4 per cent increase. Penetration was up by 580 basis points Y-o-Y for IGL and 410 basis points for GEL, while MGL saw a 350 basis points decline. Potential growth in CNG volumes over the next 12 months is projected to be 15 per cent for GEL, 8 per cent for MGL and 9 per cent for IGL.
Price hikes have offset some costs. But May saw higher Brent prices (11.4/bbl in the last three months), new well gas prices (1.0/metric million British thermal unit or mmbtu) and rupee depreciation. IGL faces margin pressure due to its higher exposure to Brent-linked gas. GEL may pass on blended cost rise to industrial consumers.
MGL's fourth quarter (Q4) adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) was ₹260 crore, down 26 per cent quarter-on-quarter (Q-o-Q) due to higher gas costs at ₹35.2 per standard cubic metre (scm). Other operating expenses increased 8 per cent Q-o-Q.
Net realisation was at ₹48.8/scm and total sales volume of 4.7 million standard cubic metres per day (mmscmd) was up 6 per cent Y-o-Y. MGL is somewhat insulated due to having no spot LNG or Brent linkage. MGL took price hikes in the domestic PNG and CNG segments in April. Unit Ebitda of ₹6.2/scm was down 25 per cent Q-o-Q, and adjusted net profit of ₹130 crore decreased 35 per cent Q-o-Q. Overall volume at 4.7 mmscmd was up 1 per cent Q-o-Q.
GEL benefited as Morbi industrial volumes surged from 0.4 mmscmd in mid-March to 8 mmscmd currently, driven by propane unavailability. The company has guided for 7-8 mmscmd through June, and Q1FY27 volumes are likely to be 12-13 mmscmd. Non-Morbi growth could be 9 per cent annually over FY26-28.
The merger and restructuring makes it hard to compare financials. The Q4FY26 volumes at 8.8 mmscmd was down 5 per cent Y-o-Y. Consolidated net profit was ₹150 crore with power segment losses (Ebit loss of ₹120 crore in Q4), regasification losses (₹20 crore) among others. High LNG prices and rupee depreciation will compress Q1 margins. GEL has raised CNG pricing by ₹2.5/kg with more hikes signalled.
Restructuring effective from May consolidates CGD, gas trading, exploration and production, and wind power under GEL, with a tax benefit of ₹7,200 crore of accumulated losses unlocked through merger, with ₹1,900 crore of write-offs still available. Balance sheet also has ₹5,000 crore of cash equivalents. But sustained high LNG prices and losses in power and regasification are concerns.
IGL reported volume growth in Q4FY26 offset by low margins. Net revenue rose 5.5 per cent Y-o-Y, with growth in both CNG & PNG segments. Total sales volumes increased to 9.7 mmscmd, up 5.6 per cent Y-o-Y. Ebitda came at ₹420 crore, up 10.4 per cent Y-o-Y.
IGL expects 350,000 more billed connections in FY27 and guides for over 20 per cent growth for domestic PNG volume. But price rise and potential supply disruptions are concerns. Q1FY27 is projected to witness near-term headwind.
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