Indraprastha Gas jumps 6% as Nomura upgrades stock on easing gas prices

Japan-based brokerage Nomura has upgraded Indraprastha Gas Ltd (IGL) to ‘Buy’ from ‘Neutral,’ on the back of attractive valuations after a sharp correction and emerging margin tailwinds from easing global gas prices. Nomura has set a target price of ₹230.

 

The brokerage also reiterated its ‘Buy’ rating on Mahanagar Gas Ltd (Target: ₹1,510), as softer Henry Hub-linked gas prices are expected to reduce imported gas costs and support profitability for city gas distributors (CGDs).

 

On the bourses, IGL share price rallied up to 5.54 per cent to an intraday high of ₹193.35 per share, while MGL share price rose up to 4.22 per cent to an intraday high of ₹1,159.25.

 

 

At 10:00 AM, IGL share was trading at ₹192.25, up 4.94 per cent. Meanwhile, MGL share was trading 2.81 per cent higher at ₹1,143.50. By comparison, BSE Sensex was trading flat with a positive bias at 84,692.75 levels.

 

The upgrade comes amid evolving dynamics in global energy markets, where lower crude oil prices, currency movements and gas price corrections are reshaping margin outlooks across the oil and gas value chain.

 

US Henry Hub gas prices corrected sharply in the week ended December 12, 2025, declining 5 per cent week-on-week (W-o-W) to $4.7/mmbtu, after touching multi-year highs earlier. On a quarterly basis, however, Q3FY26 Henry Hub prices were up 32 per cent quarter-on-quarter (Q-o-Q) at $4.0/mmbtu. Nomura believes the recent softening is positive for Indian CGDs, especially those with exposure to Henry Hub-linked contracts.

 

MGL sources over 30 per cent of its gas from Henry Hub-linked contracts, while IGL’s exposure stands at around 18 per cent. Both stocks have corrected sharply over the past month, with MGL down 9 per cent and IGL down 14 per cent, compared with a 1 per cent rise in the Nifty 50. Nomura views current valuations as attractive, particularly as imported gas costs are likely to trend lower after the winter peak during December-February. Meanwhile, domestic gas prices, which are linked to Brent crude, are expected to remain muted, providing additional margin support.

 

Oil prices, shale investment and Russian crude flows

 

On the crude oil front, Nomura highlighted that soft oil prices could pressure new shale investments in the US. According to Argus, crude prices below $60 per barrel make new shale wells largely unprofitable due to elevated fixed costs, including materials, equipment, chemicals and higher labour expenses driven by inflation. Data from the Kansas City Fed Energy Survey suggest that new wells require a breakeven WTI price of $63 per barrel, while prices need to exceed $78 per barrel for any meaningful increase in drilling activity. While shale drilling remains correlated to WTI prices with a three-month lag, Nomura noted that sensitivity has declined as improved drilling efficiency allows fewer rigs to deliver higher output.

 

Nomura also pointed to developments in Russian crude pricing, where the discount on Russian oil to Dated Brent for India has slightly widened to around $7 per barrel, from $6.9 previously. This widening reflects increased buying interest from China amid subdued Indian demand. Argus estimates that Chinese independent refiners may have purchased 9-15 million barrels of Urals crude for December and January arrivals.

 

At the same time, Indian oil marketing companies (OMCs) are reportedly considering increasing Urals purchases, while seeking additional documentation to verify cargo origins, in line with Indian banks’ requirements to avoid sanctioned entities.

 

That said, Nomura sees near-term gas price relief as a key positive for CGDs, underpinning its upgrade of IGL and continued preference for MGL, even as global oil markets remain shaped by weak prices, currency movements and shifting trade flows. 

  Disclaimer: Target price and stock outlook has been suggested by Nomura. Views expressed are their own.