The Government of India has now made the blending of compressed biogas (CBG) with natural gas mandatory, which is used to run vehicles and power kitchens.
According to a notification released by the Petroleum Ministry, Compressed Bio-Gas Blending Obligation (CBO) will be voluntary till FY25.
Blending obligations will become mandatory from FY26 keeping 1 percent, 3 percent and 4 percent of the total CNG and PNG consumption for FY26, FY27, and FY28 respectively. From FY29 onwards, CBO will be 5 percent.
Officials say that oil marketing companies will be required to install at least one new-generation alternate fuel vent at all their retail outlets within the next three years.
Like in the case of ethanol blending, Compressed Bio-Gas Blending Obligation is likely to cut down India’s natural gas imports, which have increased from 13.5 million metric tonnes (MMT) in 2011-12 to around 25 MMT in 2022-23. The increase in biofuel use will also put farm waste to good use (instead of farmers burning it) and reduce greenhouse gas emissions.
Listed below are four stocks that could benefit from blending of biogas with natural gas:
GAIL (India) Ltd
With a market capitalization of Rs. 1,04,643 crores, the shares of GAIL (India) Ltd started Thursday’s trading session on a flatter note at Rs. 159.80 compared to its previous close of Rs. 160. The shares hit a high of Rs. 161.10, gaining around 1 percent and close the day at Rs. 159 apiece.
GAIL India had planned a capital expenditure (capex) of Rs 10,000 crores for the financial year 2022-23. The company aims to incur a capex of Rs 30,000 crore in the next three years, mainly on pipelines, petrochemical projects, city gas distribution (CGD) projects, operational capex, equity contributions in group companies, etc.
Furthermore, the FY24 estimated capex stands at Rs 12,000 crores.
Adani Total Gas Ltd
With a market capitalization of Rs. 1,16,629 crores, the shares of Adani Total Gas Ltd Thursday’s trading session on a higher note at Rs. 1,077 compared to its previous close of Rs. 1,068. The shares hit a high of Rs. 1,080, gaining around 1 percent and close the day at Rs. 1,062 apiece.
The company has announced plans to invest Rs 18,000 to 20,000 crores in the next 8-10 years to expand its clean fuel infrastructure, including compressed biogas (CBG) and EV charging.
Additionally, the joint venture between Adani and TotalEnergies SE has planned for almost 150 billion rupees ($1.8 billion) of capital spending over the next few years.
Mahanagar Gas Ltd
With a market capitalization of Rs. 12,307 crores, the shares of Mahanagar Gas Ltd Thursday’s trading session on a higher note at Rs. 1,180.95 compared to its previous close of Rs. 1,179. The shares hit a high of Rs. 1246.15, gaining around 6 percent and close the day at Rs. 1,240.10 apiece.
Mahanagar Gas Ltd (MGL) had planned a capital expenditure (capex) of Rs 700 to 800 crores for FY23. The company aims to invest in various projects and initiatives to enhance its presence in newer geographical areas in Maharashtra’s Ratnagiri and other regions. Furthermore, the company has plans to invest Rs. 600 to Rs. 800 crores for FY24.
In addition to the capex, MGL has plans to set up 4-5 LNG dispensing stations and a CBG plant with a capacity of 1000 tons per day in Mumbai over the next 1 to 1.5 years.
Gujarat Gas Ltd
With a market capitalization of Rs. 37,287 crores, the shares of Gujarat Gas Ltd Thursday’s trading session on a higher note at Rs. 516 compared to its previous close of Rs. 515.20.
The shares hit a high of Rs. 547.85, gaining around 6 percent, also recorded as the company’s fresh 52-week high and close the day at Rs. 541.10 apiece.
The company’s Capex plans for FY24-25 are in the range of 1,000 crores to Rs. 1, 200 crores. Furthermore, the company has laid pipelines in Ahmedabad rural, DNH, and Dahej to accommodate the expected industrial volume.
In addition, the company has added 53,000 new domestic customers, and 221 commercial customers, and commissioned 61 new industrial customers during the quarter.
Written By Vaibhav Patil
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