Why are IGL, Mahanagar Gas, Gujarat Gas shares rising from intraday lows? EXPLAINED

Shares of City Gas Distribution (CGD) companies such as Indraprastha Gas, Mahanagar Gas and Gujarat Gas recovered from day’s low levels and rallied up to 6% on Friday. Indraprastha Gas share price jumped the most, as much as 6.19% to a high of ₹453.35 apiece on the BSE. Mahanagar Gas share price gained 2.5%, while Gujarat Gas stock rose nearly 2%.

The gains in these CGD stocks came after a news report of a government order regarding the supply of LPG to these companies.

The government has directed Oil & Natural Gas Corporation (ONGC) and GAIL India to allocate LPG shrinkage to these CGD companies in a phased manner, according to a report by CNBC-TV18.

Out of the total 2.55 million metric standard cubic meters per day (mmscmd), 1.27 mmscmd will be allocated to these CGD companies during the December quarter, the report noted.

Furthermore, the allocation of natural gas to these companies will be determined based on their consumption during the previous quarter, it added. As per a circular dated December 31, 2024, GAIL India has been instructed not to reduce gas allocations to CGD companies without prior approval from the Ministry of Petroleum and Natural Gas.

The circular also mandates ONGC and GAIL to each divert 0.64 mmscmd of gas for Compressed Natural Gas (CNG) or Piped Natural Gas (PNG) consumption to these companies, the new channel reported.

Notably, in October and November 2023, the Administered Price Mechanism (APM) gas allocation for the transportation segment was reduced to 45% from the earlier 70% level. This reduction prompted CGD companies to increase prices by ₹1.5 to ₹3 per kilogram.

At 2:25, Indraprastha Gas shares were trading 4.36% higher at ₹445.50 apiece, Mahanagar Gas shares were up 1.76% at ₹1,318.90, while Gujarat Gas stock price was up 1.36% at ₹514.90 apiece on the BSE.

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