Synopsis: Indraprastha Gas and Mahanagar Gas stocks rose after PNGRB announced a unified gas transport tariff from Jan 2026. Good price, stable margin, higher demand, and a Nomura upgrade were the reasons behind the positive sentiment.
A silent policy change gave rise to loud market reactions. Indraprastha Gas and Mahanagar Gas jumped nearly 7 percent as a result of a new gas tariff regulation that guaranteed lower costs, more stable margins, and cheaper fuel, thus changing the prospects of India’s city gas distributors. In this article, we will discuss it in detail.
About the News
The shares of Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL) saw a nice jump in their prices after the Petroleum and Natural Gas Regulatory Board (PNGRB) announced a new single natural gas transportation tariff, which will be effective from January 2026. The revised plan has reduced the number of tariff zones from three to two, thus making the pricing structure more accessible throughout the country.
According to the announcement, the transport tariff has been set at Rs 54 per million metric British thermal unit (MMBtu) for short distances of up to 300 km and Rs 102.86 MMBtu for long distances (beyond 300 km). Also, CNG and domestic PNG consumers throughout India will be billed the Zone-1 tariff of Rs 54 per MMBtu even if they are far away, thus giving a standard and straightforward gas pricing.
How can gas distributors benefit from this?
The new tariff structure is clearly beneficial for IGL and MGL from a cost and margin perspective. With transportation charges capped at Rs 54 per MMBtu for most volumes, the companies are likely to see lower and more predictable gas sourcing costs, especially in markets located farther from supply hubs. This reduces volatility in input costs and improves visibility on operating margins over the medium term.
In addition, lower CNG and PNG prices are expected to boost consumption, particularly in price-sensitive segments such as private vehicles, taxis, and household users. A fall of Rs 1.25–2.5 per kg in CNG and Rs 0.9–1.8 per Standard Cubic Meter (SCM) in PNG can drive higher volumes, helping both companies improve throughput and operating leverage. Over time, this combination of stable margins and rising demand could support earnings growth and strengthen the investment case for both IGL and MGL.
Analyst Comments
Nomura, a brokerage firm, has raised the rating of Indraprastha Gas Ltd (IGL) from “Neutral” to “Buy” following attractive valuations and also increased its price target from Rs 215 to Rs 230, signalling an upside potential of 25 percent from its previous day’s closing price of Rs 183.42 per share.
Nomura anticipates that IGL’s margins will be better as a result of transmission tariffs being lowered and taxes reduced, and that the company will start enjoying these benefits from Q1 FY27.
The brokerage firm emphasised that the gas sourced from Gujarat will be subject to a very low tax rate of 2 percent as compared to the earlier 15 percent, and it also expects the Henry Hub gas prices to decrease, thereby increasing the profits. As a result of this positive development, shares of Indraprastha Gas Ltd and Mahanagar Gas Ltd jumped by 7 percent and 4 percent respectively.
Written by Satyajeet Mukherjee
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