Low and stable gas prices result in huge gains for IGL, MGL
City gas distribution (CGD) companies have continued to stay in favour with investors on the back of strong gas demand growth and firm earnings prospects. Domestic gas prices have remained unchanged during a recent review for the April-September period. The stable gas price environment bodes well for CGD companies from a demand perspective, and is also supportive of their margin profile.
Rising prices of petrol and diesel have made compressed natural gas (CNG) used by automobiles a cheaper fuel option. This is in addition to rising demand for piped natural gas (PNG) from households and the industrial sector. Besides, geographical expansions being undertaken by the CGD companies add to volumes as well.
“The stability coupled with low gas prices comes at a good time for CNG and PNG users as the price of petrol and diesel is extremely high due to the taxes levied, while prices of LPG (liquefied petroleum gas) too have been on a rise with the recovery in oil prices” said CARE Ratings in a note.
