IGL Faces Another CNG Price Hike Risk Amid High LNG Costs
Indraprastha Gas (IGL) may face another price hike for compressed natural gas (CNG) if liquefied natural gas (LNG) prices remain high and domestic supplies stay constrained, according to Probal Sen, Oil and Gas Analyst at ICICI Securities.
The latest ₹4-per-kg increase in Delhi-NCR is expected to provide only partial relief to IGL's margins. The company's EBITDA declined to ₹3.4 per standard cubic meter (SCM) in the April-June quarter of 2026, and gross margins fell to around ₹12 per SCM.
Sen expects IGL's EBITDA to improve to around ₹4.5-5 per SCM in Q2FY27 based on current LNG prices, but this is still below its target of ₹7 per SCM. A resolution around the Strait of Hormuz could help bring down LNG prices and reduce pressure on city gas distributors (CGDs).
Other CGD companies have also taken price increases, with some facing margin pressure. However, Sen said that new government regulations encourage companies to increase customer penetration and expand their networks, leading them to accept some margin pressure in the near term.