Don’t Trade in the Dark—Get Your Pre-Market Report Every Day.Join Now
Search stocks
Indraprastha Gas Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤14th Nov 25

Summary : Indraprastha Gas Limited maintains a positive outlook for volume growth and margin expansion, driven by policy support and international expansion, despite facing short-term cost pressures and the transition of public transport to EVs.

Management Perspective positive : Management expressed confidence in achieving 8%-10% volume growth, maintaining Rs. 7-Rs. 8 EBITDA margins, and highlighted the Saudi JV as a 'very big opportunity' for future expansion and profitability.

Concall Report Analysis & Insights

Business Overview

  1. IGL is a leading CGD company operating across 12 geographical areas in 4 states.
  2. The company operates over 2,500 km of steel pipelines and 29,000 km of MDPE network.
  3. IGL supplies natural gas to 31.75 lakh households, 5,300 industrial units, and 7,200 commercial establishments.
  4. The company operates 955 CNG stations across 4 states.
  5. Q2 FY'26 total sales volume grew 3% year-on-year to 857 million standard cubic meters.

Future Growth Prospects

  1. Management expects 8%-10% overall volume growth for FY'26, excluding DTC volumes.
  2. CNG vehicle adoption is strong, with 19,000 average monthly additions, up 21% YoY.
  3. GST rationalization (28% to 18%) on CNG vehicles enhances competitiveness against EVs.
  4. Reduction of VAT on domestic gas from Gujarat (15% to 2%) will improve EBITDA margins.
  5. PNGRB's single-zone tariff framework is expected to positively impact IGL's margins.

Management Insights

  1. We have a well-diversified portfolio offering stability and significant growth potential.
  2. EBITDA margins are expected to improve going forward, driven by volume growth and cost reductions.
  3. We are confident in maintaining our EBITDA margin guidance of Rs. 7-Rs. 8 per SCM.
  4. The Saudi JV represents a very big opportunity for IGL to expand into the gas value chain.
  5. We are continuously improving operational efficiency, contributing incrementally to benefits.

Signs of Skepticism

  1. Analysts questioned the discrepancy between reported growth rates and their own calculations, especially for Delhi volumes.
  2. Queries arose about the sustainability of OPEX reductions, asking if it's a 'new normal'.
  3. Lack of specific details on the Saudi JV's tender document, pricing, and exclusivity terms was noted.
  4. Uncertainty about the full impact of rupee depreciation on margins despite tax benefits.

Risk Factors

  1. Sales to DTC and DIMTS declined due to their transition from CNG to electric mobility.
  2. Increased average gas procurement costs led to a decline in Q2 EBITDA and PAT.
  3. Soft LPG prices can lead to minor switching from gas to propane in the industrial segment.
  4. Rupee depreciation could offset benefits from tax rationalization on gas costs.
  5. Uncertainty regarding the implementation timeline of the single-zone tariff framework.

Good To Know

  1. Q2 FY'26 total revenue was Rs. 4,432 crores, a 9% year-on-year growth.
  2. Q2 FY'26 EBITDA stood at Rs. 443 crores, and PAT at Rs. 373 crores.
  3. H1 FY'26 CAPEX was Rs. 580 crores, with full-year core CAPEX guidance of Rs. 1,200-Rs. 1,400 crores.
  4. MNGL's Q2 profit was Rs. 148 crores, with H1 profit around Rs. 300 crores.
  5. IGL is pursuing a 40% equity stake in a Saudi JV for industrial gas distribution, targeting 1-1.5 MMSCMD per city.

Key Drivers

  1. GST reduction boosts CNG vehicle adoption.
  2. VAT reduction improves input gas costs.
  3. Single-zone tariff framework enhances margins.
  4. Saudi JV offers international growth opportunity.

Key Analyst Discussions

Competitive Environment

  1. Analysts asked about the impact of soft LPG prices on gas demand and competitiveness.
  2. Questions were raised about the competitive environment and chances of winning bids in Saudi industrial cities.
  3. Inquiries about the transition of DTC/DIMTS buses to electric vehicles and its effect on CNG sales.

Market Trends & Consumer Behavior

  1. Questions addressed the overall volume growth guidance for FY'26 given current run rates.
  2. Analysts asked about the specific reasons for lower NCR growth compared to historical rates.
  3. Inquiries were made about the number of remaining DTC and DIMTS buses to be phased out.

Financial Highlights

  1. Analysts inquired about Delhi's volume growth in Q1 and Q2, excluding DTC sales.
  2. Questions were raised regarding the reasons for Q2 margin reduction and gas cost increases.
  3. Analysts sought clarification on gas sourcing mix (APM, NWG, HPHT, RLNG) in MMSCMD terms.
  4. Questions focused on the expected impact of VAT reduction and tariff rationalization on EBITDA margins.
  5. Inquiries were made about the CAPEX guidance for core business and diversification.

Product Composition

  1. Analysts asked for specific growth percentages for CNG and PNG segments in NCR.
  2. Questions related to the impact of DTC sales decline on overall CNG growth figures.

Strategic Considerations

  1. Analysts sought the strategic rationale, investment, and financing modalities for the Saudi JV.
  2. Questions were asked about the regulatory and margin environment for gas licenses in Saudi Arabia.
  3. Inquiries focused on the volume potential and timeline for gassing in the Saudi industrial cities.