IGL Q2 Net Profit Crashes 93% to Rs 24.38 Crore as Elevated Gas Procurement Costs Squeeze Margins
Indraprastha Gas Limited (IGL), India's leading city gas distribution (CGD) company, reported a steep 93.5% decline in standalone net profit for the second quarter ended September 30, 2026. Net profit tumbled to ₹24.38 crore compared to ₹372.51 crore in the corresponding quarter of the previous fiscal year, as a sharp spike in input gas costs dismantled operating margins despite record operational delivery.
On a consolidated basis, the company's net profit dropped 93.8% year-on-year to ₹23.75 crore from ₹384.95 crore.
Record Volume Growth Outpaced by Cost Inflation
The dramatic earnings contraction came in spite of operational expansion across transport and household networks. IGL's average daily sales volume crossed the milestone of 10 million metric standard cubic metres per day (mmscmd) for the first time, reaching 10.06 mmscmd during the July–September period, up 8% from 9.31 mmscmd a year earlier.
Gross sales turnover climbed 26% year-on-year to ₹5,999.13 crore compared to ₹4,431.63 crore in the year-ago period, while standalone revenue from operations rose 26% to ₹5,613.62 crore.
Key Volume and Operational Highlights:
- Total sales volumes grew 8% year-on-year to 925.59 million standard cubic metres (mmscm).
- Compressed Natural Gas (CNG) sales volumes rose 9% year-on-year to 696.63 mmscm, driven by steady automotive conversions.
- Piped Natural Gas (PNG) sales rose 8% overall, with domestic PNG volumes surging 16% to 73.31 mmscm.
- Industrial and commercial PNG volumes logged a modest 2% gain to 109.35 mmscm.
Escalating Sourcing Costs Drive Margin Compression
The severe erosion in operating profitability was primarily triggered by higher domestic and imported natural gas procurement costs. Purchases of stock-in-trade jumped 48% year-on-year to ₹4,646.01 crore from ₹3,141.49 crore, causing total expenses to climb 40% to ₹5,789.92 crore.
City gas distribution companies have faced tightening domestic natural gas allocations under the Administered Price Mechanism (APM), compelling operators to bridge shortfalls through more expensive imported Liquefied Natural Gas (LNG) and alternative domestic sources.
Because IGL refrained from passing on the entire burden of elevated input costs to retail CNG and PNG consumers, operating leverage worked in reverse. Profit before tax (PBT) plummeted to ₹9.59 crore from ₹475.36 crore in the corresponding quarter last year. A tax credit of ₹14.79 crore during the quarter cushioned the net profit to ₹24.38 crore.
Market Outlook and Sector Implications
The Q2 print underlines the critical headwinds facing Indian city gas distributors. While structural demand drivers remain intact—supported by city gas expansion mandates and vehicle conversions—profitability hinges heavily on pricing power and gas allocation stability.
IGL currently runs city gas distribution networks spanning 34 districts across 11 geographical areas in Delhi, Uttar Pradesh, Haryana, and Rajasthan, operating over 1,000 CNG stations and servicing more than 3.5 million piped gas households.
For institutional and retail investors, the wider city gas distribution sector remains under observation as markets assess how companies manage input cost inflation, potential retail tariff revisions, and policy allocations from the Ministry of Petroleum and Natural Gas in upcoming quarters.
