NSE:MGLL:Rs.1,128.35(-14.04%) and NE:IGL:Rs.325.30(-9.84%) at 18-Nov-2024 at 3.30 pm
Today, shares of IGL and MGL experienced a significant crash. These two companies, which are city gas distributors operating in Gujarat and Maharashtra, were severely impacted by recent GAIL & ONGC decision.
GAIL, which had been supplying gas to these companies at lower prices, reduced Administered Price Mechanism (APM) gas allocations to them by 15% to 20% due to their failure to pass on the cost benefits to consumers. Previously, ONGC had also cut Administered Price Mechanism (APM) gas allocations by 20% on October 16, 2024, which similarly led to a sharp decline in the share prices of MGL and IGL.
Following these developments, several brokerages have downgraded the stocks of both companies, forecasting a further decline of 10% to 20%. The companies are now likely to increase gas prices gradually over the coming months. However, due to the ongoing election climate, any price hikes might be delayed. In Maharashtra, where elections are currently taking place, MGL may raise gas prices post-election. Similarly, IGL, which operates in Delhi, is expected to adjust its prices after the February elections.
Brokerages have expressed concern over the companies’ inability to address these issues effectively. Any delay in resolving these challenges is likely to impact their revenues and profits further.