IGL May Need Another CNG Price Hike Amid High LNG Prices
Indraprastha Gas (IGL) may need to raise compressed natural gas prices again if liquefied natural gas prices remain high and domestic gas supplies stay constrained, according to Probal Sen, Oil and Gas Analyst at ICICI Securities.
The latest ₹4-per-kg increase in Delhi-NCR is likely to provide only partial relief to the company's margins. IGL's margins came under pressure in the April-June quarter of 2026 (Q1FY27), with gross margins falling to around ₹12 per standard cubic meter (SCM) and earnings before interest, taxes, depreciation and amortisation (EBITDA) declining to ₹3.4 per SCM.
The latest price hike could improve margins by around ₹1.2-1.3 per SCM, but this would still leave the company below its target of ₹7 per SCM in EBITDA. Sen expects IGL's EBITDA to be around ₹4.5-5 per SCM in the July-September quarter of 2026 (Q2FY27), based on current LNG prices.
A resolution around the Strait of Hormuz could also help bring down LNG prices, reducing some of the pressure on city gas distributors (CGDs). Sen said CGDs may not necessarily aim to immediately restore margins to their earlier levels, as new government regulations encourage companies to increase customer penetration and expand their networks.