Gas allocation decision drag MGL & IGL share price down yesterday 18-Oct-2024

Today City gas distribution (CGD) companies such as MGL & IGL were hit down due to government gas allocation decisions. MGL & IGL both operate in metro cities of India and the government decided on gas allocation i.e. with effect from 16, the government reduced gas allocation by 21% to these companies, which will impact both company businesses. There is chances that these companies will increase the price of gas but due to the upcoming election it may change the price after the election so the profitability of these companies will get hit. Today, the MGL share price was down by -9.94 Rs.1,587.00 and the IGL share price was down -10.26% close price was Rs.452.80.

Ministry of Petroleum stated the policy specifies that CGD entities will receive gas only based on the available quantity allocated to GAIL India for these segments. Allocation to the company for CNG (transport) has been reduced by 20% effective 16 Oct 2024 compared to the previous average quarterly APM allocation.

Because of this companies are likely to be forced to pass on the majority of the hike in gas cost to consumers or else take a huge hit on their margin.

Coming months there will be elections in Maharashtra and Delhi so these companies might wait till the election and then there is the chance to increase the hike in gas prices. To date, there is no announcement regarding price hikes.