Synopsis:
Indraprastha Gas Limited gained investor confidence as GST inclusion of natural gas is set to cut taxes, lower costs, and enhance competitiveness alongside its strong operational growth.
A leading player in the city gas distribution sector, known for supplying clean energy solutions, saw its shares rise sharply after the government decided to include natural gas under the GST regime. The move is expected to reduce taxes, ease input costs, and improve competitiveness against alternative fuels.
Indraprastha Gas Limited’s stock, with a market capitalisation of Rs. 31,053 crores, rose to Rs. 223.50, hitting a high of up to 1.52 percent from its previous closing price of Rs. 220.15. Furthermore, the stock over the past year has given a negative return of 16.6 percent.
Reforms In GST
Inclusion of natural gas under the GST regime, which is expected to lower taxes and input costs for city gas distribution companies. This GST reform, along with IGL’s strong operational performance boosted investor confidence.
Additionally, Gujarat Gas’s positive commentary on margin improvements due to tax reforms further supported the rally in IGL’s stock price, despite a recent 10% correction in share prices of CGD companies prior to the GST announcement.
What does this mean?
The inclusion of natural gas under India’s Goods and Services Tax (GST) regime has been a long-standing demand from the oil and gas sector, aimed at simplifying the fragmented tax structure and reducing costs for producers, distributors, and end-users.
Currently, natural gas is excluded from GST despite being constitutionally covered leading to a dual levy of central excise duty and state-level value-added tax (VAT) ranging from 11-15% (or up to 24% in some cases), with no eligibility for input tax credit (ITC). This cascading effect inflates costs without offsets, making natural gas 20-25% more expensive than alternatives like LPG in certain applications.
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Q1 Financial Highlight
The company reported revenue of Rs. 3,914 crore in Q1FY26, up 11% year-on-year from Rs. 3,517 crore but marginally down 1% sequentially from Rs. 3,948 crore. Over the past three years, revenue has grown at a strong CAGR of 25%, reflecting consistent expansion.
Net profit stood at Rs. 428 crore in Q1FY26, declining 11% YoY from Rs. 480 crore and 5.5% QoQ from Rs. 453 crore. Despite near-term margin pressure, the company has delivered a 4% profit CAGR and maintained a robust 19% ROE CAGR over three years.
Written By Fazal Ul vahab C H
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