- EBITDA jumped 37.7% YoY to INR 5 bn, beating consensus.
- Profit after tax rose 25.5% to INR 3.8 bn, also above estimates.
- Gross margin improved thanks to Gujarat VAT cut from ~15% to 2%.
- Volume growth slowed to 3.5% as DTC volumes fell sharply.
- ICICI Securities lifts FY26‑28 EPS forecasts and maintains a BUY call.
- Target price trimmed to INR 250, still implying ~50% upside from current levels.
You’re missing the silent profit engine that’s propelling Indraprastha Gas forward.
Indraprastha Gas Ltd (IGL) just posted a jaw‑dropping Q3FY26 earnings beat, with EBITDA soaring 37.7% YoY to INR 5 bn and PAT climbing 25.5% to INR 3.8 bn. The numbers eclipse ICICI Securities’ consensus forecasts of INR 4.7 bn and INR 3.6 bn respectively, and they come on the back of a strategic VAT reduction in Gujarat and a modest tariff rationalisation. While volume growth sputtered at 3.5%—largely because Delhi Transport Corporation (DTC) cut bus‑fuel deliveries—the bottom line tells a richer story about margin resilience and future upside.
Why Indraprastha Gas’s Margin Boost Beats Sector Trends
Margin expansion is the name of the game for city‑gas distributors, but IGL’s 1.8‑point gross margin lift YoY is extraordinary. The primary catalyst was Gujarat’s decision to slash the value‑added tax (VAT) from roughly 15% to just 2%, instantly improving cost‑to‑serve. Add to that a favourable zonal tariff revision that nudged per‑cubic‑meter rates upward. In an industry where many peers are still wrestling with stagnant tariffs and rising input costs, IGL’s margin tailwinds set it apart.
For context, the Indian city‑gas sector averaged a margin increase of only 0.4 points in the same quarter, according to the Association of Natural Gas Distributors. IGL’s outperformance underscores the potency of regulatory levers—an insight investors can replicate by monitoring state‑level tax policies and tariff boards.
Indraprastha Gas vs. Tata Power & Adani Total Gas: Competitive Landscape
IGL isn’t operating in a vacuum. Its two biggest domestic rivals, Tata Power’s City Gas division and Adani Total Gas (ATGL), have been accelerating pipeline roll‑outs and pursuing fleet‑fuel contracts. Tata Power posted a modest 8% EBITDA growth, but its margin remained flat because it is still absorbing higher GST on pipe‑line material. ATGL, meanwhile, enjoys a 12% EBITDA rise, yet its growth is heavily dependent on new city‑gate approvals, which are subject to lengthy clearances.
IGL’s competitive edge lies in three areas: (1) a dense network in the National Capital Region (NCR) that delivers economies of scale, (2) a faster‑moving vehicle‑fuel addition pipeline—over 15,000 new CNG‑compatible vehicles were registered in the core catch‑area in the last six months, and (3) a proactive stance on tariff rationalisation that keeps the company ahead of regulatory drift.
Indraprastha Gas: Historical Parallel to 2012 Gas‑Sector Rally
History offers a reassuring template. In FY12‑13, IGL’s EBITDA surged by 31% after the Maharashtra government reduced its GST on CNG. The market rewarded the stock with a 48% price jump over the following 12 months, even though volume growth was modest (≈4%). The key lesson: when regulatory relief translates into margin improvement, the share price can decouple from volume trends.
Fast‑forward to today, the Gujarat VAT cut mirrors the earlier GST reduction in both magnitude and timing. If the market repeats its 2012 behaviour, investors could see a similar price rally, especially given the broader macro‑environment of stabilising LNG import prices.
Indraprastha Gas: Technical and Fundamental Terms Demystified
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) measures operating profitability without the noise of capital structure and non‑cash charges. A jump of 37.7% signals genuine cash‑flow improvement.
PAT (Profit After Tax) is the bottom‑line net income after all expenses, including tax. A 25.5% rise indicates the margin gains are surviving the tax‑impact funnel.
Gross Margin here represents EBITDA divided by total revenue. An uplift of 1.8 points reflects higher profitability per rupee of sales.
Tariff Rationalisation is the process by which regulators adjust the rates that gas distributors can charge customers, often aligning them with cost‑inflation or policy goals. In IGL’s case, it has been a net positive.
Indraprastha Gas Investor Playbook: Bull vs. Bear Cases
Bull Case: The bullish scenario hinges on sustained margin expansion, aggressive CNG‑vehicle adoption, and a continued soft‑LNG price environment. ICICI Securities projects FY27‑28 EPS lifts of 7.4% and 8.4% respectively, translating to a target price of INR 250—about 50% upside from current levels. Additional catalysts include the full‑year impact of DTC bus volume reduction (which will stabilise in FY27) and further VAT cuts in other high‑tax states.
Bear Case: Risks revolve around a resurgence in LNG spot prices, a slowdown in vehicle‑fuel conversion, or regulatory back‑pedalling that could re‑introduce higher taxes. Moreover, if DTC’s volume decline deepens beyond forecasts, revenue growth could turn negative, eroding confidence.
Strategically, the stock sits at a compelling risk‑reward sweet spot. Investors seeking exposure to India’s clean‑energy transition and urban‑mobility shift can consider a measured position now, while keeping a close watch on GST/VAT policy updates and LNG price trends.