City gas distribution companies, such as IGL and MGL, experienced a significant drop in their share prices in early trading on November 18. This decline was a result of the government's decision to reduce the Administered Price Mechanism (APM) gas allocation by 20% for the second consecutive month.

The stocks had already been under pressure due to a similar reduction announced in October. IGL reported a 20% cut in its gas allocation, while MGL faced an 18% reduction. Adani Total Gas also indicated a 13% decrease. The revised allocation is approximately 20% lower than previous levels, which will have a negative impact on IGL's profitability.

To mitigate this, the company is exploring various options, including discussions for a potential gas price increase to pass on costs to customers.