Your CNG Prices Could Get Hiked By Rs 6-8 Per Kg
Prices of compressed natural gas, especially in Mumbai and Delhi could be hikes by Rs 6-8 per kg soon.
The key driver of this price hike is the reduction in domestic gas allocation for companies like Mahanagar Gas and Indraprastha Gas whose main operating regions include Mumbai and Delhi.
Reduced allocation of domestic gas has a negative impact on the operating costs of the companies.
CNG Price Hike: Why And By How much?
The reduction of domestic gas allocation has a negative impact on the margins of Indraprastha Gas and Mahanagar Gas.
After the first cut of deallocation from ONGC Ltd. was announced in mid- October 2024, Emkay Research stated that the companies would have to take a Rs 3-3.5 per kg hike in the retail selling prices of CNG. After the first cut was announced, Indraprastha Gas' management in a conference call to discuss the results for the second quarter stated that the company would need to hike CNG prices by Rs 5 per kg in Delhi and Rs 5.5 per kg in other states to maintain same level of operating profit.
After the second deallocation by GAIL (India) was announced on Friday, Systematix believes that companies will need a Rs 6-8 per kg hike in CNG prices, in order to maintain margins.
When Will The Price Hikes Happen
As per IIFL Securities, the decreased APM gas allocation remains a big overhang on the companies in the near term, due to the Delhi and Maharashtra state elections. Systematix, expects the price hike to be announced soon, but till then the stocks could remain under pressure.
Indraprastha Gas' management has stated that the company is seriously contemplating a price hike, but has not taken it so far due to the festive season. The hike is likely to happen after the festive season, the company stated in its earnings conference call.
