Foreign brokerage Nomura has issued a warning regarding the Delhi EV Policy 2026-30, stating it creates a "structural overhang" for Indraprastha Gas Ltd (IGL) and its auto-CNG volume trajectory. The policy, approved by the Delhi Cabinet on June 29, 2026, marks a significant shift towards mandate-led electric vehicle (EV) adoption rather than just incentives.
The new policy sets an ambitious target for 95 percent of new vehicle registrations to be electric by 2027, a substantial increase from the previous 2020 policy which targeted 25 percent by 2024. Committing Rs 15,000 crore over four years for subsidies, tax waivers, and charging infrastructure, the policy is set to take effect from July 1, 2026.
Impact on Indraprastha Gas Ltd (IGL)
Nomura views the policy as structurally negative for IGL, particularly concerning its Delhi auto-CNG volumes. While CNG two-wheelers are not a significant part of IGL's volumes, and three-wheeler sales have seen a structural decline due to faster EV adoption, the brokerage highlights the car segment as the most significant risk. CNG cars and taxis constitute approximately 65 percent of IGL's total CNG volumes.
While the near-term earnings impact might be limited due to the existing fleet, Nomura anticipates a structural deceleration in new vehicle additions for IGL in Delhi from FY27 onwards. The firm suggests that IGL's future volume growth will increasingly depend on geographic expansion into areas like Uttar Pradesh and Haryana, growth in PNG household connections, and LNG diversification. However, these alternative segments typically offer lower margins compared to CNG.
Mahanagar Gas Ltd (MGL) Outlook
For Mahanagar Gas Ltd (MGL), Nomura expects no direct policy impact immediately, as MGL primarily operates in Maharashtra. However, the brokerage cautions that if Maharashtra were to adopt a similar policy, MGL could face comparable terminal risks in the future. Nomura notes that Mumbai and Thane have not yet banned diesel vehicles, unlike Delhi more than a decade ago, suggesting diesel might be targeted before CNG in Maharashtra. The coastal city status of Mumbai may also allow for less stringent pollution control measures in the near to medium term. Nomura prefers MGL among the City Gas Distribution (CGD) companies it covers, citing its faster volume growth profile and lower EV-mandate risk in the short to medium term.
Gujarat Gas Ltd Assessment
Gujarat Gas Ltd's portfolio is largely dominated by industrial and commercial PNG (Piped Natural Gas), with auto-CNG comprising a smaller share. Consequently, Nomura believes that if a similar EV policy were implemented in Gujarat, Gujarat Gas would be the least affected among its CGD peers.
"We believe CGDs may now need to start to aggressively pursue inorganic opportunities to grow volumes given the risk of pollution-led CNG mandates in large cities," Nomura stated, underscoring the broader shift expected across the sector.
Nomura has set target prices for these companies: Rs 165 for IGL, Rs 1,142 for MGL, and Rs 335 for Gujarat Gas.