City gas distribution companies (CGDs) have continued to remain the Street’s favourites with rising demand for cheaper and cleaner fuel. The focus on pollution control is driving prospects for these companies further.
Demand for piped natural gas (PNG) from the industrial sector is on the rise, while compressed natural gas (CNG) demand has been a key growth driver for CGD’s. Geographical expansions, being undertaken by CGDs, have improved forward volume and earnings outlook too. Not surprising, stocks are seeing regular earnings upgrades.
Shares of Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL) gained 3-4% on Tuesday. Nomura Global Market Research said CGDs were the best way to play gas theme, and IGL remains its top pick.
