Disappointing Q2 Results Send Indraprastha Gas Shares Down 10% to 52-Week Low

IGL’s Volume Growth Fails to Cushion a Gas-Cost Shock

The city gas distributor sold more gas in the September quarter, but higher procurement costs sharply reduced the profit left from each unit.

Higher turnover could not prevent a profit collapse

IGL’s standalone net profit fell to ₹24.38 crore in the September quarter, down 93.5% from ₹372.51 crore in the corresponding year-earlier period cited in the results. Gross sales turnover, by contrast, rose to ₹5,999.13 crore from ₹4,431.63 crore. The contrast is central to the quarter: revenue growth did not translate into earnings growth as higher input gas costs weighed on margins.

Turnover reflects both the amount of gas sold and the price at which it is sold; it does not, by itself, indicate that the underlying business has become more profitable. For investors, the sharp divergence between turnover and profit makes the cost of gas, the company’s ability to pass it through and the timing of any price changes more important than headline sales growth.

Demand remained firm, but margins bore the pressure

The operating numbers offered a more resilient picture. CNG volumes grew 9% year on year and piped natural gas sales rose 8%. IGL’s average daily gas sales reached 10.06 million standard cubic metres per day in July-September, crossing the 10 mmscmd mark for the first time, against 9.31 mmscmd a year earlier.

That growth suggests demand across transport and household customers continued to expand, but it did not insulate earnings from procurement costs. The company’s challenge is to preserve affordability and demand while recovering higher input expenses through customer prices. If those adjustments lag costs, volume gains may still come with weak profitability.

Gas sourcing and price pass-through remain key uncertainties

CARE Ratings has identified West Asia tensions and concerns over LNG supplies as near-term pressures on gas sourcing and margins. Its rationale said IGL’s PBILDT margin had moderated to 6.45% in Q1FY27 from 13.07% a year earlier, with higher gas costs and a time lag in passing them on to customers contributing to the squeeze. The agency noted that IGL increased gas prices in August 2026, which it expected to support margin recovery.

Domestic gas allocation to CNG and household PNG customers—segments accounting for 83% of sales volumes—helped mitigate the impact on volumes, CARE said. Still, supply conditions and pricing decisions remain important to profitability. The rating rationale also flags regulatory and demand-supply risks, while noting that IGL’s infrastructure exclusivity has expired in Delhi and that the company has applied for a 10-year extension.

The share-price fall raises the bar for evidence of recovery

IGL fell as much as 10% to ₹125.65, below its previous low of ₹137.30, in a firm broader market. At 11:26 a.m., it was down 5.5% at ₹131.60 while the Sensex was up 1.3%; 6.86 million shares traded across the NSE and BSE. The move indicates a sharp reassessment of the earnings outlook after the results, though a single session does not establish how margins will trend.

Investors will need to assess whether the August price increase can meaningfully narrow the gap between gas costs and selling prices, and whether volume momentum holds. IGL’s established network and leading position in Delhi are relevant strengths, but they do not remove exposure to input prices, regulation or execution risks as the company develops newer geographical areas.

Key Highlights

• Standalone Q2FY27 net profit fell 93.5% year on year to ₹24.38 crore.
• Gross sales turnover increased to ₹5,999.13 crore from ₹4,431.63 crore.
• CNG volumes rose 9% and PNG sales grew 8% year on year.
• Average daily gas sales reached 10.06 mmscmd, crossing 10 mmscmd for the first time.
• CARE Ratings cited gas costs, West Asia-related supply concerns and pass-through timing as margin risks.

Investor Note: IGL’s demand and volume growth are constructive, but the quarter shows that they are not enough to protect earnings when input costs rise faster than prices charged to customers. Investors may wish to track subsequent margin performance, gas-price adjustments and supply conditions rather than infer a recovery from turnover growth alone.