IGL's board will meet on December 10 to consider a bonus share issue for equity shareholders, following a significant drop in share prices due to reduced APM supply. The company recently declared an interim dividend of Rs 5 per share, while both IGL and MGL shares have fallen over a third from their yearly highs after the Centre's decision to cut gas allocations to city distributors.
India is reducing its supply of affordable gas for vehicles amid domestic production shortages, potentially worsening air quality in cities like New Delhi. Retailers are increasingly relying on costly imports and have begun raising prices for compressed natural gas (CNG), which powers various vehicles. As the capital faces severe smog, concerns grow that consumers may reconsider the benefits of CNG due to rising costs and limited options.
Mahanagar Gas has increased the price of CNG by Rs 2/kg to Rs 77/kg, effective November 22, in response to rising input costs. This adjustment follows a reduction in APM gas supply by Gail India to city gas distributors, impacting profitability. Despite a rise in shares on the announcement day, MGL's stock is down 4% year-to-date.
City gas distribution (CGD) companies are expected to raise retail prices of compressed natural gas (CNG) following a second 20% cut in the allocation of cheaper Administered Pricing Mechanism (APM) gas by the government. The gas regulator has emphasized the need for CGD players to keep CNG prices competitive with petrol and diesel to ensure sector growth and prevent customer exploitation.
Shares of city gas distribution companies, including IGL and MGL, plummeted over 10% on November 18 following a 20% cut in Administered Price Mechanism (APM) gas allocation for the second consecutive month. IGL reported a 20% reduction in allocation, while MGL faced an 18% cut, impacting profitability. The company is actively seeking solutions, including potential gas price increases to mitigate the adverse effects.
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