Shares of city gas distribution (CGD) companies have declined by 23-33% from their highs this year. CGD companies include Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL) and Gujarat Gas Ltd.
True, the lockdown will affect volumes of many sectors as economic activity has collapsed and CGD companies are no exception. But analysts expect demand to bounce back relatively sooner for these companies once the lockdown is lifted as vehicles start hitting the road. Note that demand recovery from some industry categories is expected to be slower.
Another positive is lower input costs, which can act as a cushion for lower volumes and profitability.
