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Informist, Friday, Feb. 13, 2026

 

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--Indraprastha Gas: INR 280 mln provision made towards labour code changes 
--CONTEXT: Comments by Indraprastha Gas mgmt in post-earnings analyst call 
--Indraprastha Gas: Buses refil volumes in Q3 fell due to rise in pollution 
--Indraprastha Gas: To maintain capex of INR 12 bln for FY26 
--Indraprastha Gas: See core capex for FY27, FY28 at INR 12 bln-INR 15 bln 
--Indraprastha Gas: Spent INR 8.47 bln as capex in Apr-Dec 
 

 

By Pallavi Singhal and Nandini Sinha

 

NEW DELHI/MUMBAI – Indraprastha Gas Ltd. expects margins to improve in the coming quarters on the back of rationalisation of transmission tariffs and tax benefits on domestic gas, even as it absorbed a one-time INR 280 million provision towards the implementation of the Labour Codes in the December quarter, its management said at a post-earnings analyst call.

 

The company said the rationalisation of transmission tariffs was estimated to have an impact of about INR 10 billion on the sector, of which the company's share was around INR 3.3 billion. While part of the benefit has been passed on to consumers, nearly INR 2.6 billion remains with the company, which will benefit margins in the coming quarters. 

 

Secondly, the replacement of the 15% value-added tax with a 2?ntral sales tax on domestic gas sourced from Gujarat was implemented only in December, meaning the company realised the benefit for only part of the quarter, the management said. Gujarat is a key sourcing and transit state for natural gas, and the VAT cut directly reduces procurement costs for city gas distributors such as Indraprastha Gas.

 

The implementation of the new Labour Codes led to a one-time provision during the quarter. "Going forward, it may not be that high," management said, indicating a normalisation benefit of roughly 30 paisa per standard cubic metre. Indraprastha Gas has maintained its earnings before interest, tax, depreciation, and amortisation guidance at INR 7–8 per standard cubic metre. "Combining all these, we are seeing that we should be near INR 7 going forward. The long-term guidance remains INR 7 to INR 8," the company said.

 

Management added that the transmission tariff notification was delayed despite communication being issued in July. "We don't want to make the retail selling price of our CNG product volatile. So we deferred any price increase," management said. With the regulatory framework now in place, the company expects the remaining benefit to flow through, with margins approaching INR 7 per standard cubic metre at current prices.

 

Management said the drag from Delhi Transport Corp. volumes is largely behind the company as the state-run transporter transitions its fleet from compressed natural gas to electric vehicles. "Less than 100 buses are left... by March, this DTC volume will be almost zero," management said. Average DTC consumption declined from around 40,000 kilograms per day in the September quarter to about 5,000–6,000 kilograms per day in the December quarter, compared with roughly 155,000 kilograms per day in the base quarter last year.

 

Total gas sales volumes increased by over 3% on year to 867.18 million standard cubic metres in Oct-Dec. Excluding volumes from the DTC buses, compressed natural gas sales grew about 10% year-on-year in the December quarter. "When we will not see any drag, then the normal growth will reflect in the overall number," management said. The company added that pollution-related curbs in the Delhi National Capital Region also affected bus refilling volumes during the quarter, but volumes have since normalised.

 

Total gas procurement during the quarter was about 9.75 million standard cubic metres per day, including gas from the administered price mechanism, new well gas, high-pressure, high-temperature gas, and regasified liquefied natural gas, the management said. Domestic sources currently account for roughly 50% of the portfolio, they said. 

 

"Going forward, we anticipate 50% regasified liquefied natural gas and 50% from domestic sources, including high-pressure high-temperature gas, new well gas and administered price mechanism gas," management said. On pricing expectations, the company management said: "Our target to potential suppliers is that 12% of Brent should be the landed price for us."

 

Management said rupee depreciation against the dollar during the quarter, from around INR 86-87 to INR 90–91, led to higher gas procurement costs, resulting in an increase in landed cost of imported liquified natural gas of roughly INR 2–2.5 per standard cubic metre. The rise in input costs partially offset the benefit from the Gujarat tax change. The company added that margins would have been higher had the rupee not weakened during the quarter. The Indian rupee depreciated nearly 2% on a quarterly basis, averaging around INR 89.1 per dollar, compared with INR 87.4 in the previous quarter, according to Prabhudas Lilladher Pvt. Ltd.

 

Indraprastha Gas maintained its core capital expenditure guidance of INR 12 billion for FY26, of which INR 8.47 billion has been spent in the first nine months. For FY27 and FY28, the company expects core capital expenditure in the range of INR 12 billion to INR 15 billion annually. "Our aspiration or targets are around INR 1,200 to INR 1,500 crore (INR 12 billion to INR 15 billion) in the core segment," management said.

 

The company plans to add 80–100 new compressed natural gas stations annually, with around 40–45% of core capital expenditure directed towards CNG infrastructure. The company also aims to add 1 million new piped natural gas connections over the next two years, reiterating its target of adding 1 million standard cubic metres per day of incremental volume annually.

 

The company reported its quarterly earnings Thursday. The company reported a net profit of INR 3.59 billion for the December quarter, up over 25% on year. The net profit was marginally below the consensus estimate of INR 3.65 billion for the quarter. The net sales for the quarter were INR 44.89 billion, up over 8% on year. Analysts had estimated the company's top line at INR 40.76 billion. 

 

The company's earnings before interest, tax, depreciation, and amortisation were INR 4.73 billion, up over 31% on year. The company's EBITDA margin expanded to 12% from 10% a year ago, as revenue growth outpaced increases in input costs.

 

Friday, the company's shares ended at INR 166.51 on the National Stock Exchange, down 1.8% from the previous close.  End

 

US$1 = INR 90.63

 

Edited by Saji George Titus

 

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