IGL

Indraprastha Gas Ltd

Bonus Candidate (1:1)

Ex-date 31 January 2025

ABOUT

Incorporated in the year 1998, Indraprastha Gas Limited (IGL) is in the business of city gas distribution in the National Capital Territory of Delhi. IGL also supplies the gas to the near by regions of Noida, Greater Noida, Ghaziabad, Hapur, Gurugram, Meerut, Shamli, Kanpur, Muzaffarnagar, Karnal and Rewari, Hamirpur, Fatehpur, Ajmer, Pali, Rajasmand.

IGL is formed as a JV promoted by GAIL (India) Limited and Bharat Petroleum Corporation (BPCL). Government of NCT of Delhi is holding 5% equity.

KEY POINTS

Leading player in City Gas Distribution

IGL has operations in the NCT of Delhi, Noida, Greater Noida, Ghaziabad, Rewari, Karnal, Kaithal, Kanpur, Muzaffarnagar, Ajmer, and Banda with 819 CNG stations, 25.60 lacs residential connections, and ~10,000 industrial/commercial customers.

Business segments

IGL is into selling natural gas in different forms:-

Piped Natural Gas:- The Company had a total of 25.6 Lakh connections in Delhi & other geographical areas as of 9MFY24.

The Company provided 3.10+ Lacs new connections during FY23. Company increased its steel pipeline network from 1,571 km in FY 2021-22 to 1,868 km in FY 2022-23 and its MDPE network from 17,240 km in FY22 to 20,632 km in FY23.

Compressed Natural Gas:- Co. has 819 CNG stations. In FY23, 81 new CNG stations were commissioned and achieved total compression

capacity of 97 lacs kgs per day, catering to around 17 Lacs vehicles.

Natural gas for commercial & Industrial usage:- In the commercial segment, sales volume surged by about 30% from 50.81 MMSCM in FY22 to 72.25 MMSCM in FY23. The industrial customer base grew from 3,358 to 3,913, and the commercial customer base increased from 4,357 to 5,108 between FY22 -FY23.

Sales Volume Mix

CNG - 75%

Residential - 7%

Sale to other CGD Cos - 6%

Commercial/Industrial - 12%

Revenue Bifurcation - FY23[6]

CNG - 75%

PNG - 25%

Average Sales/per day - 8.09 mmscmd

H-CNG station

IGL in association with Indian Oil Corporation is planning to set up an H-CNG station as a pilot project at Rajghat for DTC buses and such a project is the first of its kind in the country. [7]

Mobile CNG dispensing units

IGL is planning to promote usage of gas in home appliances and further start mobile CNG dispensing facilities and charging facilities for e-vehicles.

Backward integration

Plans are in the pipeline for backward integration through setting up of a gas meter manufacturing unit in India.

Consultancy services

It is also considering leveraging its expertise and execution capabilities by way of providing Consultancy services for setting up CGD projects.

Capex

IGL plans an annual capex of about ₹1,200 crore from FY24 to FY26 for expanding its CGD network in new areas and enhancing existing ones. This will be financed through internal accruals, company liquidity, and security deposits, without resorting to debt.

Associate Companies

IGL has two associate companies namely Central U.P. Gas Limited (CUGL) & Maharashtra Natural Gas Limited (MNGL). IGL holds 50% of the paid-up equity of both CUGL & MNGL. CUGL is engaged in City Gas Distribution in cities of Kanpur, Bareli, Jhansi, and Unnao in Uttar Pradesh. MNGL is in the City gas distribution business in Pimpri, Pune, Chinchwad, Chakan, Talegaon, Hinjewadi, Nasik, Sindhudurg in Maharashtra & Ramanagara in Karnataka.

Diversification

A) Electric Vehicle Charging Points

Company is also venturing into the electric vehicle charging segment and is planning

to commission 50 stations during FY 2023-24 for battery swapping mode.

B) Hydorgen Generation Plant

Co. is exploring setting up a Green Hydrogen generation plant to blend with natural gas, with a feasibility study conducted by a leading consultant. A pilot project in Dasna, Ghaziabad is planned, and it partnered with the ACME Group to explore business opportunities in green hydrogen, aiming to drive customer adoption and demand nationwide.

Case against Delhi Government

DDA raised a demand of ₹155.64 crores in 2013-14 due to increased license fees for sites leased by the Company to set up CNG stations in Delhi. The fees were retroactively applied from April 2007 to March 2014. The Company contested this with a writ petition in October 2013. Subsequently, DDA revised the demand to ₹330.73 crores until March 2016, communicated in August 2016.

The case is pending within the Hon'ble High Court of Delhi and the Company is of the view that such demand is not tenable.

The Scrip close on Friday 24 January 2025 ₹383.25