IGL, MGL shares tumble up to 7% after changes in domestic gas allocations

Shares of city gas distribution companies Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL), and Adani Total Gas Ltd (ATGL) fell up to 6.4% in early trade on Wednesday after all three companies disclosed material changes in their domestic gas allocations, citing government-mandated revisions effective April 16, 2025.

The shares of MGL took the hit, falling 6.3% to their day’s low of Rs 1,233, followed by IGL shares, which fell by 3.8% to Rs 172. Meanwhile, Adani Total Gas shares slipped 1.6% to Rs 601.05.

The allocation of cheaper APM (Administered Price Mechanism) gas has been curtailed and replaced by higher-priced New Well Gas (NWG), raising concerns of margin pressures across the sector.

The move, stemming from reduced domestic gas availability and shifting supply dynamics, is expected to affect profitability for these companies as they now have to rely more heavily on costlier gas supplies for their PNG (domestic) and CNG (transport) segments. Each company has issued separate stock exchange filings detailing the scale of impact.

IGL

In a filing to the exchanges, IGL revealed that its domestic gas allocation has been reduced by around 20% with effect from April 16, 2025. While the company has been compensated with an allocation of New Well Gas (NWG) equal to approximately 125% of the shortfall, the higher pricing of NWG—linked to 12% of the Indian Crude Basket—is expected to dent margins.

IGL had been receiving gas at a fixed government price of $6.75/MMBtu, which will now be partially replaced with more expensive alternatives, impacting the bottom line.

MGL

MGL announced that its allocation of APM natural gas has been reduced by 18% compared to the previous fortnight, under the revised guidelines issued by the Ministry of Petroleum and Natural Gas.

The company noted that while the shortfall is being substituted with New Well/Well Intervention Gas (NWG), the increased cost will negatively impact profitability. MGL is actively evaluating options to mitigate this impact but acknowledged the near-term pressure on margins.

ATGL

ATGL, too, informed exchanges that its APM gas allocation has been cut by 15%, effective April 16, 2025. The company will now depend more on NWG, which is costlier, thereby adding to the overall gas procurement expense.

While the company is exploring measures to cushion the impact, it stated clearly that the combination of lower APM allocation and higher NWG pricing will weigh on financial performance going forward.

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