Shares of Indraprastha Gas declined sharply after the company reported a significant drop in first-quarter profit and margins, even as sales volumes continued to grow, highlighting rising costs and ongoing regulatory disputes.
Indraprastha Gas shares fell on Thursday after the company reported a steep drop in first-quarter profit and a sharp squeeze in margins, even as volumes continued to rise. The stock opened unchanged at Rs 154.54 before sliding to an intraday low of Rs 149.01 and ending the session at Rs 151.60 on the National Stock Exchange, according to EquityPandit. Reuters-style market data was not provided in the source material, but the move reflected investor concern that stronger sales were being outweighed by higher costs.
The company’s June quarter figures showed the pressure clearly. EquityPandit said standalone net profit fell 48% year on year to Rs 186.18 crore from Rs 355.94 crore, while consolidated profit dropped 44% to Rs 237.92 crore from Rs 427.81 crore. Standalone revenue rose 16% to Rs 5,040.15 crore, but EBITDA, or earnings before interest, tax, depreciation and amortisation, fell 42% to Rs 295.50 crore and the margin narrowed to 6% from 13%, indicating that cost inflation outpaced top-line growth. LiveMint also reported a 15.03% rise in operating expenses from a year earlier, underscoring the same trend.
Despite the weaker earnings, gas volumes held up. Total volumes increased 6% to 878.98 million standard cubic metres, with compressed natural gas sales up 6% and piped natural gas volumes up 4%, according to EquityPandit. The quarter followed CNG price increases in May, when IGL lifted rates by Rs 1 per kilogram across its operating areas, taking the month’s total increase to Rs 4 per kg as it sought to offset higher input gas costs and a weaker rupee. Business Standard’s report on the March quarter also showed that profitability had already been under strain, with consolidated net profit down 25.18% year on year and the operating margin slipping to 10.12% from 12.49%, suggesting the latest results extended a broader margin slowdown.
The company is also dealing with a separate dispute over a Rs 330.73 crore demand from the Delhi Development Authority linked to licence fee increases. EquityPandit said the matter has been referred to the AMRCD mechanism after a Delhi High Court order, while IGL continues to treat it as a contingent liability and is seeking relief from the petroleum ministry.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
