New Delhi:
Across the country, especially in the national capital Delhi and Mumbai, the price of Compressed Natural Gas, i.e. CNG, may very soon increase by Rs 6 to 8 per kg.
Actually, the reason behind this fear of price rise is the cut in domestic gas allocation for companies like Mahanagar Gas and Indraprastha Gas, because the main operating regions of these two companies are Mumbai and Delhi. In fact, whenever companies’ domestic gas allocation is reduced, their operating costs are negatively impacted.
Increase in price of CNG: Why and how much…?
The margins of Indraprastha Gas and Mahanagar Gas have been negatively impacted by the cut in domestic gas allocation. After ONGC Limited first announced the allocation cut in mid-October, 2024, Emkay Research had said, companies will have to increase the retail selling price of CNG by Rs 3-3.5 per kg.
Emkay Research now says that companies like Indraprastha Gas and Mahanagar Gas will need to increase the price by at least Rs 4.5-4.8 per kg to maintain the margins at their level. The brokerage firm believes that Indraprastha Gas will require a price increase of Rs 6.3 per kg across its CNG segment, while Mahanagar Gas will require a price increase of Rs 6.4 per kg.
Jefferies has also suggested that Indraprastha Gas, Mahanagar Gas and Gujarat Gas will have to increase their CNG and PNG prices by 10 per cent to maintain margins at the level before the announcement of domestic allocation cuts. Systematix believes that to maintain margins, companies will need to increase CNG prices by Rs 6-8 per kg.
When will CNG price increase…?
There is a possibility of pressure on the margins of city gas companies in the near future, because the timing of this price increase will be a big problem. IIFL Securities and Jefferies do not expect any price increase in the CNG segment soon due to the assembly elections in Maharashtra as well as Delhi.
In its Q2FY25 conference call, which took place just after the first announcement of cut in domestic gas allocation, Indraprastha Gas management had said the company was seriously considering a price hike, but had not done so at the moment due to the festive season. Went. The company had said in its earnings conference that there is a possibility of growth after the festive season.
