The government has implemented a temporary 20% cut in the allocation of natural gas to city gas distribution companies for priority segments under the Administrative Price Mechanism (APM), which previously helped gas companies procure gas at a lower cost from government-owned or supported domestic entities.
The 20% reduction in APM gas allocation for Compressed Natural Gas (CNG) means that starting on October 16, 2024, companies will see a 20% reduction in their supply of the cheaper, government-regulated gas. To meet demand, they will need to purchase more expensive gas from the open market, increasing their overall procurement costs and potentially impacting their profit margins.
The gas stocks that saw a fall of more than 12 percent on the impact of a 20% cut in APM gas allocation were:
Indraprastha Gas Ltd:
With a market capitalization of Rs. 31,853.54 crores, Indraprastha Gas Ltd Limited made an intraday low of Rs. 439.35 representing a 12.92 percent increase from its previous closing price of Rs. 504.55 per share.
Indraprastha Gas Limited (IGL) is a leading City Gas Distribution company in India, which operates in 11 geographical areas across 4 states. The company supplies natural gas to over 2.7 million households, nearly 5,000 industrial customers, and 6,100 commercial customers and Operates 882 CNG stations, serving approximately 2 million vehicles.
In terms of financial performance for Q1FY25, the company reported a net profit decrease of 8 percent to Rs. 480.22 crores compared to Rs. 521.99 crores in Q1FY24, while revenue from operations marked an increase of 3.44 % to Rs. 3,891.47 crores from Rs. 3,761.85 crores in comparison to the same period.
Mahanagar Gas Limited:
With a market capitalization of Rs. 15,359.94 crores, Mahanagar Gas Limited made an intraday low of Rs. 1,503.75 representing a 14.66 percent increase from its previous closing price of Rs. 1,762.10 per share.
Mahanagar Gas Ltd (MGL) pioneered the development of a Natural Gas distribution network in Mumbai, its surrounding areas, and the Raigad district. As of FY24, the company serves a PNG customer base of 10.69 lakh and a CNG customer base of 10 lakh, with approximately 347 CNG stations.
In terms of financial performance for Q1FY25, the company reported a net profit decrease of 22.76 percent to Rs. 284.53 crores compared to Rs. 368.4 crores in Q1FY24, while revenue from operations also marked an increase of 3.21% to Rs. 1,744.57 crores from Rs. 1,690.18 crores in comparison to the same period.
Written By: Joseph Pv
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