GAIL, Gujarat Gas, IGL, Mahanagar Gas Preferred By ICICI Securities In Gas Sector, Here's Why

ICICI Securities Report

Stocks to Buy: We remain positive on the space with GAIL, MGL, IGL, Gujarat Gas being the preferred pecking order.

Indian natural gas consumption has risen steadily over the last 6-7 quarters, although the trend has been volatile. Q1 FY25 saw record 206 million metric standard cubic metre per day of consumption in India, led by a spike in gas-fired power demand which has since moderated to 193-196 mmscmd once power demand tapered off past the season.

Nevertheless, demand is up sharply from levels of <175mmscmd in Q1 FY24. Notably, the increase has come despite domestic supply rising only marginally by ~5 mmscmd by Q3 FY25-TD. This means LNG supplies have risen materially by ~16 mmscmd over this period (~4.4 mtpa).

The silver lining is that due to falling crude prices, term LNG prices (% of crude) have moderated, which keeps blended gas costs for India in control, supporting margins for gas consumers.

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