Oil & Gas Sector Check - CNG Registration Pace Slowed But Adoption At High: Dolat Capital

Dolat Capital Report

September 2024 CNG registrations for three wheeler plus four wheelers categories slowed down as-

1. Mahanagar Gas Ltd. (7.7k/m) declined 4%;

2. Indraprastha Gas Ltd. (8.2k/m) declined 19%; and

3. Gujarat Gas Ltd. (10.1k/m) declined 22% on YoY basis.

We noted a decline in registrations across companies, but if the current registration momentum sustains for a year, then CNG volume growth is likely to be in the 11%/9%/7% range for Gujarat Gas/Mahanagar Gas/IGL. Meanwhile, CNG adoptions sustained near to high levels in city gas distributions with notable uptake in Sep-24, wherein adoption for Gujarat Gas/MGL/IGL reached 32%/41%/24%.

In H1 FY25, we believe specific factors will likely lead the 11% CNG growth in MGL geographical areas, while IGL is still struggling to achieve its projected CNG volume growth versus the company guidance.

Based on our database, the share of CNG commercial registrations for MGL GA has doubled (~57%) in last two years, whereas the share is only ~25% for the IGL GA registrations.

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