City gas distributors set for strong margin recovery in FY26: Crisil lists 3 reasons why

City gas operators are expected to post an operating profit of Rs 7.2–7.5 per standard cubic metre (scm) in the current fiscal, marking an 8–12% recovery from the sharp margin erosion seen in 2HFY25, as per a report by Crisil Ratings. The report noted key factors contributed to the growth and key risks to watch out for-

Shift to contracted supplies boosts profitability

The report said City Gas Distribution (CGD) companies have secured more long-term and medium-term gas contracts, reducing their reliance on spot markets where prices remain significantly higher. These new contracts include domestic new well gas, HPHT gas and imported R-LNG.