IGL Sets 10.67 SCMD Volume Guidance; Plans ₹1,400-1,500 Cr CAPEX for FY'26-27
Indraprastha Gas has set a sales volume guidance of 10.67 SCMD for FY'26-27, projecting 10%-13% CNG sales volume growth and a 20% boost in domestic sales under PNG Drive 2.0. The company plans CAPEX of ₹1,400-₹1,500 crores, maintains an EBITDA target of ₹7-8 per SCM, and faces gas sourcing challenges due to geopolitical issues, with two-thirds of contracts linked to Henry Hub prices ranging from USD 2.60 to 3 per MMBTU.
*this image is generated using AI for illustrative purposes only.
Indraprastha Gas has outlined a comprehensive operational and financial roadmap, setting a sales volume guidance of 10.67 SCMD for FY'26-27, reflecting its last quarter's exit volume. The company continues to target a long-term EBITDA of ₹7 to ₹8 per SCM (standard cubic metre), while acknowledging a challenging first quarter ahead. Management has emphasised sustainable revenue growth, market expansion, and better value delivery amid ongoing geopolitical issues through careful execution and customer focus.
Volume Growth and Customer Expansion
Indraprastha Gas projects 10% to 13% growth in CNG sales volume for the next year, underpinned by expanding its domestic customer base. Domestic connections rose by 3.7 lakhs, with over 2 lakhs new customers added. Under the National PNG Drive 2.0 initiative, the company anticipates a 20% boost in domestic sales, with new annual customers estimated between 3 to 4 lakhs, up from the earlier range of 2 to 2.5 lakhs.
The segment-wise growth projections are summarised below:
| Segment: | Projected Growth |
|---|---|
| CNG Sales Volume | 10% to 13% |
| Domestic Sales (PNG Drive 2.0) | 20% |
| Industrial | Over 20% |
| PNG (Piped Natural Gas) | Over 20% |
| Commercial | Over 20% |
Gas Sourcing Challenges and Contract Pricing
Indraprastha Gas faces challenges in gas sourcing and pricing due to geopolitical issues, which have contributed to higher gas prices. Despite these headwinds, management is focused on recovering profits and cutting expenses. The company has disclosed that two-thirds of its contracts are linked to Henry Hub prices, with Henry Hub currently ranging from USD 2.60 to 3 per MMBTU (Million British Thermal Units). Management also foresees lower gas costs for CNG and domestic users due to new traffic rules.
Capital Expenditure and Financial Targets
The company plans a CAPEX of ₹1,400 to ₹1,500 crores for the next year to support its growth ambitions. Key financial and operational parameters are outlined in the table below:
| Key Parameter: | Details |
|---|---|
| FY'26-27 Volume Guidance | 10.67 SCMD |
| CNG Sales Volume Growth (Next Year) | 10% to 13% |
| Domestic Sales Growth (PNG Drive 2.0) | 20% |
| New Annual Customers (Estimated) | 3 to 4 lakhs |
| Domestic Connections Added | 3.7 lakhs |
| New Customers Added | Over 2 lakhs |
| Long-Term EBITDA Per SCM Target | ₹7 to ₹8 |
| Planned CAPEX (Next Year) | ₹1,400 to ₹1,500 crores |
| Contracts Linked to Henry Hub Prices | Two-thirds |
| Henry Hub Price Range | USD 2.60 to 3 per MMBTU |
Indraprastha Gas's strategy combines a defined volume guidance, segment-level growth projections, and a structured capital expenditure plan, even as geopolitical pressures continue to weigh on gas sourcing and pricing. The management remains focused on navigating these challenges through disciplined execution and customer-centric growth.
Historical Stock Returns for Indraprastha Gas
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.45% | -0.13% | -6.99% | -22.79% | -25.08% | -38.09% |
If Henry Hub prices rise significantly beyond USD 3 per MMBTU, how vulnerable is Indraprastha Gas's EBITDA margin given that two-thirds of its contracts are Henry Hub-linked?
Can the National PNG Drive 2.0 initiative sustain the projected 20% domestic sales growth beyond FY'26-27, and what infrastructure bottlenecks could slow customer additions?
How might the expansion of electric vehicles and alternative fuel adoption in Delhi-NCR impact Indraprastha Gas's long-term CNG volume growth trajectory?
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