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Informist, Tuesday, Jan. 28, 2025

By J. Navya Sruthi and Anand JC

MUMBAI – Indraprastha Gas Ltd. is likely to see 7-8% growth in sales volume during Jan-Mar, the company's management said in a post-earnings analyst call Tuesday. The company is likely to achieve the exit sales target of 9.5 million standard cubic metres per day in 2024-25 (Apr-Mar). The exit volume sales currently are closer to the target, the company said. 

During the initial days of the December quarter, sales growth was strong, but after the cut in gas supplies, the company had to source 2 million standard cubic metres per day gas immediately from the market. The December quarter was challenging due to gas sourcing, the company said. In October and November, the government had cut supplies of low-priced natural gas to city gas distributors by as much as 40% due to dwindling gas output.

The supply of gas to the company under the administered price mechanism was reduced from 5.11 million standard cubic metres per day to 3.23 million standard cubic metres per day, the management said. The company sourced 1 million standard cubic metres per day of gas linked to the Henry Hub Index for five years and then added another 0.65 million standard cubic metres per day to the Henry Hub. 

These agreements are competitive in the current market with the price of these additional volumes remaining within INR 38 to INR 40 per standard cubic metre. On Jan. 16, the company's domestic gas allocation has been partially restored, bringing back approximately one million standard cubic metres per day out of 1.88 million standard cubic metres per day reduction in the quarter. The management said an additional 0.5 million standard cubic metres gas per day has also been allocated to the company from new wells, which will be available from Feb. 1. The company now has more than nine million standard cubic metres per day. 

On the sales front, the company achieved sales volume of 9.11 million standard cubic metres per day last quarter, reflecting a 7% year-on-year growth. The CNG segment grew by 6% and the piped natural gas segment achieved growth of 12%, the management said. Within the piped natural gas segment, the domestic segment grew by 17% on year and the commercial segment grew by 10%.

The management said the Delhi-NCR gas sales growth in Oct-Dec was 5% on year and the areas excluding Delhi-NCR saw gas sales growth over 30% on year. Currently, the company operates 899 CNG stations which serve over two million vehicles, it said.

In October, around 24,000 privately-owned passenger vehicles were converted to operate on CNG, the company said. During Apr-Nov the addition of CNG vehicles rose by 46% on year, the management said.

The capital expenditure for FY25 is likely to exceed INR 150 billion, the management said. It said the company will maintain EBITDA in the range of INR 7-INR 8 per standard cubic metre annually. The company will have to raise prices to achieve this EBITDA, the management said and added it will take a call on price hikes as it had already raised rates by INR 4 per standard cubic metre. Domestic gas production will not go down as the Oil and Natural Gas Corp. had appointed a technical service provider to augment its output. Shares of the company closed at INR 382.80 on the National Stock Exchange Tuesday, up 1.4%.  End

Edited by Deepshikha Bhardwaj

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