Indraprastha Gas Limited (IGL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Indraprastha Gas Limited Q1 FY '27 Earnings Conference Call hosted by PhillipCapital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Nitin Tiwari from PhillipCapital Private Limited. Thank you, and over to you, sir.

Thanks, Manav. Good day, ladies and gentlemen. On behalf of PhillipCapital India Limited, I welcome everyone to Indraprastha Gas Limited's First Quarter FY '27 Earnings Call. Today from the management team, we have with us Mr. Kumar Shanker, who has recently taken the charge as MD of IGL. Congratulations to you, sir, and our best wishes for your tenure at IGL. We also have with us Mr. Mohit Bhatia, Director, Commercial. Pleasure to have you with us, sir; and Mr. Manjeet Gulati, who has recently been appointed as CFO at IGL. Congratulations to you as well, sir. I shall now hand over the floor to the management for their opening remarks, which shall be followed by a question-and-answer session. Over to you, sir.

Yes. Thanks, Nitin. Very good evening to all of you. I am Kumar Shanker, as Nitin was mentioning, I've recently taken charge of Managing Director of Indraprastha Gas Limited. On behalf of the management team of IGL, it's my pleasure to welcome you all for our earnings call on this financial results of Q1 FY '26-'27. Thank you for your continued trust and support and for joining us today. As you all know, the quarter was challenging due to the ongoing geopolitical situation in West Asia, which impacted global energy markets and created pressure on gas availability as well as prices. But despite these challenges, IGL continued to operate smoothly and ensure uninterrupted gas supplies to all our customer segments. You'll be happy to note that about half of our gas requirement during this quarter also was met through domestic sources, which helped us maintain gas supply reliability. And our company has continued to demonstrate resilience through disciplined execution and clear focus on our long-term goals. Before we begin the Q&A session, let me briefly share some of the key highlights of our performance during this quarter. With our continued efforts, we have achieved average daily gas sales volume during this quarter at 9.66 million standard cubic meters per day as against 9.13 million SCMD in the Q1 of the previous year. Our overall sales volume of CNG net of DTC and DIMTS had actually increased by around 11% with overall 9% increase in CNG sales in Delhi and double-digit growth in all the other remaining 3 states. So, in fact, you'll be glad to know that in recent days, we have touched the peak sale of up to even 58 lakhs kg in a single day, which is not only among the highest for IGL in its history, but also definitely the highest in the country for any CGD company in the country. And also, you'll be glad to know that during this quarter, we have achieved a milestone of the highest ever quarterly turnover of more than INR 5,000 crores and as far as our CapEx, we continue to invest in expanding and strengthening our PNG infrastructure and our domestic PNG customer base has already reached around 35 lakh-plus connections, while industrial and commercial connections stand today at approximately around 13,600 connections. With the planned expansion of our pipeline network and CNG stations through our ongoing capital expenditure, we believe it will support our company's long-term and sustainable growth. During this quarter, the company reported an EBITDA of INR 296 crores and a profit after tax of INR 186 crores despite higher gas costs and supply challenges arising from the global situation, we remain profitable and continue to maintain stable operations during this quarter. We believe the long-term fundamentals of CGD sector remains strong. With our growing infrastructure, expanding customer base and disciplined approach to our business, we remain committed to creating sustainable value for all our stakeholders. Now I would like to invite our Director, Commercial, Mr. Mohit Bhatia, to share his remarks. Thank you.

Thank you, Kumar sir, the MD. Good evening, everyone. I'm Mohit Bhatia, Director of Commercial at Indraprastha Gas. I would like to, first of all, welcome all our investors, analysts and the members of the financial community joining us today. Thank you for participating in our earnings conference call for the quarter ended 30th June 2026. Let me get the opportunity and privilege to share the key business developments during the quarter. So, first and foremost, to secure the proper robust infrastructure in NCR and in particularly Delhi. So, pleased to inform that we have recently commissioned a new, one more city gate station at Rohini, Delhi, which will improve the overall supply network and strengthen the infrastructure. We have already submitted our consent for the authorization for the remaining areas of Gurugram and Faridabad and have technically started the technical feasibility studies for the development of these -- both the geographical areas. We have also commenced LNG operations, that is the first and the foremost in NCR region in association with CONCOR and had commissioned the newly operational CNG station at the prestigious Noida International Airport, along with PNG in the forecourt area. Going forward, we are also pleased to inform that we have engaged with Indian Army in a nation building exercise to explore the opportunities to meet their integrated energy requirements in our geographical areas in their cantonments. As our Managing Director has highlighted some of the points related to geopolitical situation and also financial performance of the company, let me add some perspective from my side on the company's performance. Overall, the sales volume increased to about 6% as compared to the last quarter of the last year. And if we look from the perspective of Delhi NCR CNG sales, yes, it has grown by 9% as the Managing Director emphasized. And barring DTC and DIMTS volume, that is 9%, whereas a healthy growth of around 27% observed in our new GAs outside Delhi NCR. On the overall basis, almost there is a 50% incremental sales, which is coming from the new GAs. In terms of infrastructure development, our steel network expanded by approximately 25 kilometers, now further adding to around 2,600 kilometers, while the MDPE pipeline almost increased by 500 kilometers during this quarter. So, we have also added almost 1 lakh-plus PNG customers during the current quarter and almost 530-plus additional industrial and commercial customers, adding to our robust growth. On the financial front, once again, pleased to inform that we have ever -- achieved the ever highest INR 5,028 crores of the turnover, which is almost 16% as compared to the same quarter last year. While the profitability has impacted by higher gas costs during the quarter, our focus remains on volume growth, customer expansion and operational efficiency. During the quarter, we also had incurred a CapEx of INR 327 crores. We are witnessing a very healthy growth in the CNG vehicle segment. Over the last 6 months in particularly, CNG vehicle additions and conversions have [ arranged ] almost to the tune of 27,300 vehicles per month vis-a-vis 18,000 vehicles per month during the same quarter for the last year, which gives us immense confidence that CNG demand will continue to grow in the coming quarters. On behalf of the management, I assure you that we remain focused on sustainable growth, expansion of our market presence and delivering value to our customers and stakeholders while adapting to the changing business environment. With this, I welcome you once again and open the session for the question and answer.

[Operator Instructions] We have our first question from the line of Probal Sen from ICICI Securities.

Congratulations for the elevation for [indiscernible] both of you. I just had first question was with respect to the sourcing mix. If you can kindly give us a mix in terms of percentage or absolute volumes between whatever was the APM allocation, HPHT gas, New Well Gas and the mix between long-term and short-term LNG, whatever it was for the quarter? That was my first.

Okay. Thanks for the question. So, the current scenario -- in the current scenario, if we see the breakup for the Q1 for the -- this financial year, still we have around 48% coming from the domestic allocations, whether it is APM, New Well or HPHT and around 52% is coming from the imported that is through our long-term contracts and somewhere through the spot also because of the force majeure issues happened in West Asia. So, if you see the around -- we are selling around 9.5 million of standard cubic meters of gas. So 48% is coming from the domestic and around 52% from the imported.

Is it possible to share of that 52%, what was the mix between long term and spot? And also broadly speaking, what was the effective price for spot LNG for the quarter?

See, if you see because of the long-term contracts, we already -- we are in place 100% of our sourcing. However, due to the force majeure issues and all, so there has been some cuts. Yes, it is there. So, almost around 4 million out of the 5 million sourcing, which is being done from the imported around 3.9 million to 4 million is from the long-term contracts. And there was a government has supported during this quarter in terms of giving pool gas to the CGD sector, particularly as per the government notification. So around 0.6 million to 0.7 million came through the pool gas. And spot, we had to rely around 3%, you can say, roughly around 0.25 million to 0.3 million per day was through spot. And market trend, you have -- must have noticed that it varied from around $17, $18 to $21, $22. As and when it's required, we have to source it.

Got it, sir. And just in terms of how we are looking at [ casing ] going forward, what is the environment have you seen since the conflict has once again sort of picked up? Have we seen a change in terms of LNG availability? Are we able to get slightly more contracted LNG in the market today? Or does it remain still a fairly tight market? Just your thoughts on this.

So very, very highly unpredictable and uncertain situation. You are aware of the geopolitical issues. So, we are in constant touch with our suppliers, the promoter companies also and whereas whatever best we could source it from the market. So, we are in constant touch and some indications are there, whatever has been the cuts due to force majeures because as globally, India has also gone to other geographies to source the gas. And it has been there. So, long term, yes, spot will be there a little bit. But I think if we are able to get the gas from our long-term contracts, our aspiration, our vision is that. So, I think we are taking up with our upstream suppliers and something should be better.

And as we go forward, we are looking at HPHT as well. So, we are hopeful that we will be in a position to improve the overall share of HPHT as well going forward, both RLNG already that commercial has already mentioned.

One last question, if I may. Given the unpredictability, how should we look at the margin scenario going forward? Is there sort of a floor? Are we looking at further price increases to sort of shore up the margins if prices remain at the higher end, I mean, $15 to $16, how are we looking at the margin environment for the next 6 to 9 months?

So sir, actually, I would like to answer your query in 2 parts. See, point number one is we have been always giving a guidance of a long-term EBITDA around INR 7 per SCM. So, yes, there is a geopolitical issue across the globe and margins are under the stress. So, our still long-term guidance is similar. But in the subsequent quarters, it will be difficult viewing because we do not know what is the overall geopolitical impact on the country and in particular, to the CGD sector. So, that is point number one. Secondly, we have been always like a long-term guidance was there that we want to calibrate in terms of both the sales growth vis-a-vis margin. So, we are trying to maintain a good delta with alternate fuels, particularly petrol and diesel. And still there is a handsome delta with petrol in particularly around INR 17. And with the GST 2.0, it has become really conducive and favorable for the CNG automobile sector and the tremendous growth has been witnessed and to further leverage, I think it is a time to seed the market to further strengthen and capture the volumes also.

See, I would like to add one more thing also. Margins, of course, is a function of the input gas prices, more so the current kind of volatile LNG market. But next 6 months, I believe 4 factors we need to figure out how they will play out. First is, in general, there is a consensus that the U.S. supplies are going to improve. So, for India, the expectation is that it would be kind of stable. The second part is, of course, geopolitics, nobody is able to predict what is going to happen to the supplies from the Middle East. Then about the kind of consumption pull factor from China, Japan, how it's going to play out, one needs to wait and watch. But the other aspect is how the European gas storage is going to be there and the kind of winter. In all these things, there are also talks about whether this El Nino is going to become a super El Nino and in case of that, then there could be a moderate winter. So, if you really see today in the wired world, how different factors are going to play out, it's right now quite difficult to predict. But as our Director, Commercial has just mentioned that -- so what we are focusing on is the segments that we are actually going to cater to, we have a reasonable belief that with the kind of leverage that we have, particularly with respect to petrol, diesel, and all that. So, we should be able to keep it in the balance.

How challenging the environment is and your efforts to explain [indiscernible]

[Operator Instructions] We have our next question from the line of Yogesh Patil from Dolat Capital.

As you mentioned earlier that 48% of the gas sourcing is from the domestic fields or domestic side, like APM, NWG, HPHT. To our knowledge, earlier quarters, it was around -- APM around 3.3 MMSCMD, HPHT was 0.8 MMSCMD and NWG was around 0.9 MMSCMD. So, just wanted to have a little bit granular understanding on this. How much -- how much you have received in Q1 FY '27 all these 3 types of the gases? And what is the current status of this domestic sourcing part?

So there has been a little bit, I would say, reshuffling of APM and NWG in the last quarter and going forward also. So, as I mentioned, around 2.6 million last quarter average was APM and 1.26 million was the New Well Gas. As compared to the previous quarter, you are rightly, it was -- NWG was less than 1 million. So, there has been some changes in the proportion because of the geological issues of the wells across the country, and there has been some shift in the New Well Gas. And going forward, also likely to happen in this way only.

HPHT portion remains same, sir, 0.8 MMSCMD during the Q1 FY '27?

So HPHT was around 0.7 -- 0.6 to 0.7 and it's likely to increase because we understand that certain contracts across the country are going to close -- likely to be closed in September, and there will be some bids offerings coming in. So, we'll be also trying to capture it aggressively going forward.

Sir, my next question related to the CNG consumption figures for the DTC buses, DIMTS buses in million kg, if you could provide? And additionally, please provide the total CNG volume for this quarter in million kg.

Okay. So, as we mentioned in our opening remarks also, see DTC volumes are now almost zero. So, last 3 months, if you see, it's almost now 0. And the last year same quarter, it was on an average of 1.5 lakh kgs per day. So, now it is almost 0. However, secondly, if you see the DIMTS volumes, so now as compared to the Q4 of the last year and in comparison to the Q1 for this year, the volumes are more or less same. It is maintaining at around 1.5 lakh kgs per day.

And CNG volume in million kg, sir, if possible? Total CNG volume in million kg?

So in terms of million kg, it is around 5.31 per day for the quarter ended 30th June.

[Operator Instructions] We have our next question from the line of Amit Murarka from Axis Capital.

So I missed if you have already shared the split of growth between Delhi and outside Delhi that you usually share in earlier quarters.

So I'll just -- for your consumption, I'll just repeat. So, overall growth in CNG is 6% across IGL. If you see Delhi, barring DTC, it is around 9% and barring DTC, entire IGL is 11%. And if you see in particularly the outside or the new GAs, it is 27%...

And DTC, you said that now the volume for the buses has stabilized and there's no further decline that you're expecting on that count, right?

Yes, you are right. It has almost now come down to zero almost, maybe hardly 100, 200 kgs per day. So, for practical purposes, we can take it at zero now, DTC.

Now given that the vehicle registration is still going very strong, so then the CNG growth now, can we expect to kind of get close to maybe double digits or go to maybe 12%, 13% rate also in the coming quarters then?

See, absolutely. See, if I tell you, recently, you must have seen the ET Prime news also, in particularly, if I share with you one of the July data, so almost around 4.6 lakh passenger vehicles were added in the month itself of July. And Maruti in particularly has claimed that out of the new vehicles, which has been added, almost 42% of their vehicles are CNG based. So, yes, you are right, CNG is expected to grow in a very, very aggressive way subsequent to these GST cuts 2.0. And we are also witnessing the same in our -- outside GAs, it is growing at, say, 27%, very, very healthy. And in Delhi also around 9% to 10%, barring the DTC, although the base is very heavy, so maybe a percentage of growth, you cannot correlate actually, but seems to be otherwise very, very healthy.

Understood. Just lastly, also on the various changes which had happened on the gas cost side, like the changes around the transmission zonal tariffs and as well as the change in the Gujarat GST-related changes. So, all those -- the benefits are now in the sourcing mix, right? I mean the current cost that you see on natural gas is reflecting all of that benefit in the numbers.

Yes, there, that's right. But because of this unusual volatility in the light of West Asia crisis, that is a bit kind of what do you say, masked by the current situation, which we expect that once it eases out, the positive effects of that would be more pronounced.

We have our next question from the line of Vivekanand from AMBIT Capital.

Two questions. Number one is on the Delhi EV policy that was recently announced. Now since this impacts aggregators, commercial vehicles, both auto-rickshaws as well as goods carriers and also school buses, how are you looking at the impact of this on your volumes in Delhi? And secondly, if you could give us some color on the split between these vehicle segments that are impacted or covered by the Delhi EV policy, that will be great. The second question is, if you can just help us with the volume trends year-on-year numbers for MNGL and CUGL and also absolute MMSCMD?

So coming to the Delhi EV policy, yes, you're right. That mandate has already come. So, effective 1/1/2027, there will be no more 3-wheelers in particularly registration and only EV registrations will happen. But we have evaluated and analyzed although we are doing our advocacy meeting Delhi government and other stakeholders also in revoking or continuing the CNG part. But we do not see the much larger impact because only 1 lakh autos are there, 3-wheelers in Delhi and viewing the life of 15 years, I think phasing out every year, 5,000 to 6,000 will only happen. And as per our analysis around -- there will be a less than 1% impact in the overall CNG volumes in 2027. And going forward, the impact may be less than 3% by 2030. Similarly, on the commercial vehicles, yes, the new registration again will start from 1/1/2027. And for school buses also, I think the mandate is by 2030, they have to switch over 30%. So, overall, we have evaluated the scenario of the sales volume being lost vis-a-vis being added through the natural growth in particularly with a very, very strong segment from the passenger car vehicles, the expected growth is coming. So, by 2030, I think there will be an impact of around 2% to 3% on the volumes overall, and we are not viewing any much of the impact.

And to your second question on how CUGL as well as MNGL have been clocking the growth. First, on CUGL, CUGL has corresponding quarter-to-quarter growth in terms of CNG, we have clocked the 8% growth from around 0.23 MMSCMD to 0.25 they have clocked. And PNG almost we have maintained similar volumes of 0.11 to just 0.12. But overall, from 0.34 to 0.36 MMSCMD, we have clocked, which means 6% growth we have witnessed. But when it comes to MNGL, slightly more encouraging numbers have been clocked. In CNG, MNGL has clocked 13% growth from 1.27 MMSCMD to 1.44. But when it comes to PNG, MNGL has clocked a very healthy, around 29% growth from 0.58 MMSCMD to 0.75. And overall put together, from 1.85 MMSCMD, they have clocked 18% growth to reach 2.19. This is primarily driven by corresponding quarters previous year and this year, Nashik -- their Nashik GA has started getting direct gas supplies from the commissioned -- newly commissioned Samruddhi pipeline. Earlier, the Nashik GA was completely fed through LNG mode. So, that had given them the good base. And now with the pipeline there in place, the PNG growth is witnessing a very healthy trend. So, yes, so they have clocked around 18% volume growth overall.

Right. Just one follow-up. As far as the Delhi EV policy goes, there is no impact on the NCR territory outside of the National Capital Delhi, right? Is that very clear?

Absolutely, it is particularly for Delhi only. So, I don't think so there is any impact on Noida or maybe Gurugram part.

Right, right. And just one last follow-up.

As of now -- as of now, exactly. Sorry.

Okay. So, my last question is CUGL's volumes have been stuck in a rut even in FY '24 -- I mean, FY '23, '24, '25, the volumes were in the range 0.31 to 0.33 MMSCMD. Why is it that these markets like Kanpur, Bareilly, et cetera, where you would assume that CNG is underpenetrated. Why is -- why are these markets not growing faster?

So CUGL, in fact, they have clocked a reasonable 8% growth. Yes, I agree that they do have potential for this thing. But yes, with the improvement in the overall CNG ecosystem and vehicles improving, right? I guess -- and also they are coming with more stations. I think in the coming quarters, I think we should be able to see more growth there. Plus the overall input gas cost and the gas price scenario also those kind of places may be a bit more price sensitive when it comes to their industrial and the tax structure also is adding to their woes. So, I think that could be one of the reasons where when it comes to their PNG growth, particularly C&I, the tax structure is not very favorable. But I think CNG going forward should be able to show some more improvement.

We have our next question from the line of Gagan Dixit from Elara Capital.

I have a question about -- given the sharp gas cost spike. So, is IGL considering any hedging on long-term contracting strategy, I mean, to reduce this spot LNG exposure going forward?

Yes, of course, like any other entity, we are looking at it. And then, yes, we are, in fact, looking at hedging options as well, particularly because Henry Hub now provides us with the opportunity. It's a bit stable right now. So, yes, we are looking at hedging as an important tool as a part of our overall strategy. In fact, in the month of May, we have already started -- because in the month of May, we did have some opportunity with reasonable price band available. So, we have started doing that. And yes, we will be continuing to do that.

And sir, my second question is, as the new geographies outside the Delhi NCR, they are still ramping up. So typically, are the EBITDA per SCM slightly dilutive versus the mature geographies with Delhi NCR? And broadly, what is the typical difference between the new geographies and the mature geographies broadly the EBITDA per SCM sir?