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ICICI Securities Report
In a notification posted by Indraprastha Gas Ltd. on April 25, 2023, the regulator Petroleum and Natural Gas Regulatory Board has clarified long-pending issues pertaining to formal city gas distribution authorisation for the areas of Greater Noida, Faridabad and Gurugram.
We note IGL already supplies gas (0.5 million metric standard cubic metre per day) to Gurugram and Faridabad for a nominal service fee of Rs 2/standard cubic metre, which implies an Ebitda of only Rs 350 million – while for balance volumes, IGL's Ebitda margin is at a healthy ~Rs 7.7/scm (FY22 reported earnings).
We note greater Noida region is already a part of IGL's normal business operations, and this gets formally recognised in PNGRB's ruling. IGL has repeatedly stated that the development of infra and penetration in all three geographical areas has lagged potential by a wide margin, and that volume potential from Faridabad and Gurugram is material.
However, the regulator has chosen to bifurcate the areas as per its assessment of infra work already under taken and regulatory eligibility.
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