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Motilal Oswal Report
Liquid petroleum gas has been in ever-increasing use as the need for cooking gas increased amid the lockdown and owing to various government schemes.
For this reason, LPG consumption growth came in strong at 12–16% YoY over April - June, while demand for other fuels tanked to 30–60% of normal during this period. This led to a huge jump in LPG imports at approximately 65% of total LPG consumption as refineries trimmed their operating rates due to the lack of demand.
The story for the last three months is similar to that for the last three years - in 2016, the government introduced the Pradhan Mantri Ujjwala Yojana (PMUY), which led to a huge spike in LPG consumption.
Although, for Aegis Logistics Ltd., investors have been wary of capacity utilization amid increasing competition. In light of the same, we highlight the potential for increase in LPG imports (by approximately 2.7 times to 36.5 million metric ton per annum) despite a rise expected in domestic refining capacity (by approximately 1.5 times to 367mmtpa) by FY31.
Moreover, there is huge gap in the per connection consumption of gas by domestic consumers (with expected demand jump of 6.7mmtpa).
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