Indraprastha Gas Q1 FY27 Earnings Call: CNG Growth Strong Despite Higher Gas Costs and Geopolitical Challenges

Indraprastha Gas Limited (IGL) highlighted strong volume growth, expanding infrastructure and robust CNG demand during its Q1 FY27 earnings conference call held on August 14, 2026. Despite higher gas costs and uncertainty caused by the West Asia geopolitical situation, the company maintained uninterrupted supplies and reported its highest-ever quarterly turnover of ₹5,028 crore. Average daily gas sales increased to 9.66 million standard cubic metres per day (MMSCMD), compared with 9.13 MMSCMD in Q1 FY26. CNG volumes, excluding DTC and DIMTS, grew strongly, while the company continued to expand its PNG customer base and network.

Q1 FY27 Financial and Operational Performance

IGL reported a record quarterly turnover of ₹5,028 crore in Q1 FY27, representing approximately 16% year-on-year growth. EBITDA stood at ₹296 crore, while profit after tax was ₹186 crore. Profitability remained under pressure because of higher gas costs amid global supply disruptions, but the company continued to remain profitable. Average daily gas sales rose to 9.66 MMSCMD from 9.13 MMSCMD in the corresponding quarter of the previous year. Management said the long-term fundamentals of the city gas distribution sector remain strong, supported by infrastructure expansion, customer additions and increasing CNG adoption.

CNG Sales Show Strong Growth

CNG remained the key growth driver for IGL during the quarter. Overall CNG sales increased by around 6%, while Delhi CNG sales excluding DTC grew approximately 9%. Across IGL’s operations excluding DTC, CNG volume growth was around 11%, while newer geographical areas outside Delhi NCR recorded a much stronger 27% growth. Management also highlighted that IGL recently reached a peak daily CNG sale of around 58 lakh kg, described as one of the highest daily sales levels achieved by the company and among the highest for a CGD company in India.

DTC Volumes Fall to Almost Zero

The company said CNG volumes from Delhi Transport Corporation (DTC) buses have effectively declined to zero. DTC volumes had averaged around 1.5 lakh kg per day in the corresponding quarter last year, whereas the latest quarter saw negligible volumes of only around 100–200 kg per day. DIMTS volumes, however, remained broadly stable at approximately 1.5 lakh kg per day. Total CNG sales for the quarter were around 5.31 million kg per day.

Strong Growth in New Geographical Areas

IGL’s newer geographical areas continued to deliver significantly higher growth than its mature Delhi NCR operations. Sales volumes in the new GAs grew approximately 27% year-on-year, with almost half of the incremental sales coming from these newer markets. Management said these markets are still developing and should benefit from increasing CNG vehicle penetration, expansion of CNG stations and economies of scale. Rewari was specifically highlighted as an example of a newer GA where EBITDA performance is improving as volumes increase.

PNG Customer Base Crosses 35 Lakh

IGL continued to expand its PNG infrastructure and customer base. Domestic PNG connections crossed 35 lakh, while industrial and commercial connections reached approximately 13,600. During Q1 FY27, the company added more than 1 lakh PNG customers and over 530 industrial and commercial customers. The company also expanded its steel pipeline network by approximately 25 km to around 2,600 km, while the MDPE pipeline network increased by nearly 500 km.

Gas Sourcing: 48% Domestic and 52% Imported

During Q1 FY27, approximately 48% of IGL’s gas requirement was sourced from domestic allocations, including APM, New Well Gas and HPHT gas. The remaining 52% came from imported gas through long-term contracts and spot purchases. Of the imported requirement, approximately 3.9–4.0 MMSCMD came through long-term contracts, while government-supported pooled gas contributed around 0.6–0.7 MMSCMD. Spot LNG accounted for roughly 0.25–0.30 MMSCMD. Spot LNG prices were volatile during the quarter, moving broadly between $17–18 and $21–22.

IGL Looks to Increase HPHT Gas Supply

Management said the sourcing mix between APM and New Well Gas has changed because of geological issues affecting wells across the country. APM supply averaged around 2.6 MMSCMD, while New Well Gas was approximately 1.26 MMSCMD during the quarter. HPHT supply was around 0.6–0.7 MMSCMD and could increase going forward as certain contracts are expected to close and additional gas may become available through bidding processes. IGL said it would actively pursue opportunities to increase its HPHT gas share.

EBITDA Margin Guidance Remains at Around ₹7 per SCM

IGL reiterated its long-term EBITDA guidance of around ₹7 per SCM, although management cautioned that near-term margins could remain difficult to predict because of geopolitical uncertainty and volatile LNG prices. The company continues to maintain a healthy price advantage for CNG over alternative fuels. Management indicated that CNG currently enjoys a significant advantage over petrol, with the differential estimated at around ₹17 per litre. The company intends to balance volume growth and margins while leveraging the favourable economics of CNG.

CNG Vehicle Additions Accelerate

Management expressed confidence in continued CNG demand growth, supported by strong vehicle additions. CNG vehicle additions and conversions were running at approximately 27,300 vehicles per month over the previous six months, compared with around 18,000 per month in the corresponding period of the previous year. Management also pointed to strong passenger vehicle registrations, with CNG accounting for approximately 42% of new passenger vehicle registrations for certain major manufacturers, supporting expectations of continued CNG volume growth.

Delhi EV Policy Impact Expected to Be Limited

IGL said the recently announced Delhi EV policy is not expected to have a major impact on its overall CNG volumes in the near term. From January 1, 2027, new three-wheeler registrations in Delhi are expected to move toward electric vehicles. Management estimates that the impact on overall CNG volumes could be less than 1% in 2027 and around 2–3% by 2030. The company believes growth in passenger vehicles and other CNG segments should offset a significant portion of the potential decline from three-wheelers.

CUGL and MNGL Deliver Volume Growth

IGL also shared performance details for its associated businesses. CUGL recorded approximately 8% growth in CNG volumes, increasing from around 0.23 MMSCMD to 0.25 MMSCMD, while overall volumes rose from approximately 0.34 MMSCMD to 0.36 MMSCMD. MNGL performed more strongly, with CNG volumes increasing 13% from 1.27 MMSCMD to 1.44 MMSCMD and PNG volumes rising 29% from 0.58 MMSCMD to 0.75 MMSCMD. Overall MNGL volumes increased 18% to 2.19 MMSCMD.

LNG Operations and Infrastructure Expansion

IGL commissioned a new city gate station at Rohini, Delhi, strengthening its gas supply infrastructure. The company also commenced LNG operations in the NCR region in association with CONCOR and commissioned a CNG station at Noida International Airport, along with PNG facilities in the forecourt area. IGL has also begun exploring integrated energy requirements for Indian Army cantonments within its geographical areas.

Hedging Strategy to Manage Gas Price Volatility

Given the sharp volatility in global gas prices, IGL is exploring hedging as part of its gas procurement strategy. Management said the company has already started using available hedging opportunities, particularly through Henry Hub-linked options, and plans to continue evaluating such opportunities. The objective is to reduce exposure to spot LNG price volatility and provide greater stability to its gas sourcing costs.

Vehicle-Wise CNG Sales Mix

Management provided an indicative breakdown of IGL’s CNG sales. Passenger vehicles contribute approximately 48–50% of total CNG volumes, followed by commercial vehicles at around 19%, taxis at approximately 14%, buses at around 12%, and three-wheelers at roughly 7–8%. Delhi accounts for approximately 70–80% of the three-wheeler CNG segment. The company expects the impact of the Delhi EV policy on this segment to be gradual because the existing vehicle population will phase out over several years.

Gurugram and Faridabad Expansion

IGL said it has conditionally accepted authorization for certain areas of Gurugram and has begun developing infrastructure to serve customers in these locations. The company continues to contest the broader authorization issue through legal and regulatory channels. In Faridabad, IGL indicated that it will develop the areas conditionally available to it, while other portions remain with other operators. Management emphasized that expanding natural gas access remains important from a consumer perspective.

Capex Guidance of ₹1,800–2,000 Crore

IGL spent approximately ₹327 crore on capital expenditure during Q1 FY27. For the full year, management continues to target capex of approximately ₹1,800–2,000 crore. Around ₹1,200–1,300 crore, potentially rising to ₹1,500 crore, is expected to be directed toward core infrastructure. The company could allocate an additional ₹500–600 crore toward business development and diversification opportunities if suitable opportunities arise.

Natural Gas GST Inclusion Remains Uncertain

Management was asked about the possibility of bringing natural gas under the GST regime. While the Ministry of Petroleum and Natural Gas has been supportive of the idea, management noted that GST is a matter involving both the Centre and states and ultimately falls under the GST Council’s purview. At present, IGL said there is no concrete evidence indicating that a major change is imminent.

Outlook: Volume Growth Remains the Key Focus

Despite short-term challenges from elevated gas costs and geopolitical uncertainty, IGL remains focused on increasing volumes, expanding its infrastructure and strengthening its customer base. Management expects CNG demand to remain strong, particularly because of increasing CNG vehicle penetration and the price advantage over petrol and diesel. New geographical areas are also emerging as an important growth engine. While margins could remain volatile in the near term, IGL continues to target long-term EBITDA of around ₹7 per SCM.

Key Takeaway

IGL’s Q1 FY27 earnings call highlighted a strong volume-growth story despite near-term margin pressure. Record quarterly revenue, double-digit growth in newer geographical areas, more than 35 lakh PNG connections, accelerating CNG vehicle additions and continued infrastructure expansion provide positive long-term indicators. However, investors will need to monitor LNG prices, domestic gas availability, geopolitical developments, the Delhi EV policy and the company’s ability to protect EBITDA margins in the coming quarters.

This article is based on the management commentary and information provided during Indraprastha Gas Limited’s Q1 FY27 earnings conference call held on August 14, 2026. It is intended for informational purposes and should not be considered investment advice.