AI-generated · cited to primary sources · not investment advice · How we research
Indraprastha Gas
Our verdict on Indraprastha Gas isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The company has spent INR 847 crores in the first 9 months of FY26 against a full-year plan of approximately INR 1,250 crores, indicating they are on track to meet the core capex target. (1 in progress, 1 met across 2 tracked commitments)
“So, we have plans for around Rs. 1,200-Rs. 1,400 on our core in the CAPEX”
Management reported that excluding DTC volumes, CNG sales grew by 10% in Q3 FY26, hitting the upper end of their guidance range despite operational headwinds like pollution-related school closures. (1 exceeded, 2 missed, 2 met across 5 tracked commitments)
“So do we maintain that guidance in terms of like exiting this year at 10 MMSCMD... Yes, we maintain the guidance that, as you know, the CGD sector, the last quarter is the best sector.”
See the full cited Management analysis of Indraprastha Gas
How durable is the business?
CNG volume growth accelerated to 6% overall and 8% when excluding the declining DTC bus segment, driven by a record 18,000 vehicle conversions per month. (4 expanding)
“The growth in overall CNG sales is 6% and if we exclude DTC sales, the growth in CNG is almost 8%.”
IGL continues to expand its physical infrastructure, adding 45 CNG stations in the year to date and reaching a total of 973 stations, further solidifying its last-mile reach. (1 expanding)
“So almost 975 stations by -- you can say, 973 to be specific as on end of 31st of January... We have added and commissioned 45 CNG stations till now during the year”
See the full cited Business Model analysis of Indraprastha Gas
Where does growth come from?
IGL is maintaining a steady pace of network expansion, adding 91 new CNG stations in FY24 and planning another 80 for FY25. The cumulative network has grown consistently from 500 stations in FY19 to 882 in FY24. (5 steady across 5 signals, 1 leading indicator)
“So roughly around 80 to 100 CNG stations we are targeting year-over-year for maybe roughly next 3 years to 5 years. So out of the total capex, almost you can say 40% to 45% will go on the CNG”
Expansion into new Geographical Areas (GAs) is accelerating as IGL moves beyond Delhi into Uttar Pradesh, Haryana, and Rajasthan. The company is now authorized for 11 GAs across multiple states, with sales already starting in newer areas like Kanpur, Ajmer, and Pali. (5 accelerating across 5 signals, 1 leading indicator)
“Noida, Ghaziabad is growing at around 6.2%, whereas the outside or the new GS is contributing to almost 17% growth.”
See the full cited Future Growth analysis of Indraprastha Gas
What could break the thesis?
The risk is intensifying as DTC volumes have dropped significantly from 1.8-1.9 MMSCMD levels to 1.1 MMSCMD, with management confirming that all new DTC tenders will be electric-only. (3 intensifying, 1 easing, 1 high-severity)
“what we have been made to understand from DTC, I think by March, this DTC volume will be almost 0.”
Margins are showing signs of recovery; EBITDA per SCM increased to 6.03 in Q4 from 4.34 in Q3, though still below the long-term target of 7-8. (3 easing, 1 stable, 1 high-severity)
“So around 7% to 8% rupee devaluation is there, which is -- which has resulted in around INR2, INR2.5 increase in gas cost”
See the full cited Risk analysis of Indraprastha Gas
Read the full thesis on Indraprastha Gas
AI-generated informational research only. ThesisLoop is not investment advice, a stock recommendation, or a guarantee of returns.