InvestorQ : What led to the sharp fall in price of city gas distributors like MGL, IGL and Gujarat Gas?
vaishnavi mhatre made post

What led to the sharp fall in price of city gas distributors like MGL, IGL and Gujarat Gas?

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vidhya Laxmi answered.
3 weeks ago
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On Friday, the stocks of city gas distribution (CGD) companies like Indraprastha Gas (IGL), Mahanagar Gas (MGL) and Gujarat Gas were under pressure on expectation of weak earnings in the quarter. Stocks were down in the range of 5% to 6% on an average. In fact, the companies with a high proportion of CNG are expected to do well while those with a higher percentage of PNG are likely to underperform.

The other headwind for the CGD companies is the cost structure. Most companies are likely to incur high gas sourcing costs as spot liquefied natural gas (LNG) prices have stayed at extremely elevated levels. The cost has gone up so sharply that despite price hikes, the EBITDA margins are taking a hit. Stocks like Gujarat Gas are actually trading very close to their year lows.

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