New Delhi – Indraprastha Gas Ltd (IGL), one of India's leading city gas distributors, announced a dramatic 93.5% year-on-year plunge in its standalone net profit for the second quarter of FY27. Despite achieving record sales volumes, the company's profitability was severely impacted by escalating gas procurement expenses.
IGL's net profit plummeted to just ₹24.38 crore in the July-September quarter of FY27, a stark contrast to the ₹372.51 crore recorded in the same period last year. This significant decline occurred even as the company experienced an 8% increase in sales volumes and a 26% jump in gross sales turnover, which reached ₹5,999.13 crore from ₹4,431.63 crore.
Record Sales Volumes Fail to Boost Earnings
During the Q2 FY27 period, IGL's average daily gas sales surpassed the 10 million standard cubic metres per day (mmscmd) mark for the first time, reaching 10.06 mmscmd compared to 9.31 mmscmd a year prior. Both key business segments contributed to this growth, with Compressed Natural Gas (CNG) sales volumes rising 9% year-on-year and Piped Natural Gas (PNG) volumes increasing by 8%. This indicates sustained demand from both the transportation and household sectors.
However, these impressive sales figures did not translate into stronger earnings. The substantial rise in input gas costs effectively negated the benefits of higher volumes, highlighting the intense margin pressure faced by the company.
The Broader Challenge for City Gas Distributors
The situation at IGL reflects a wider challenge for India's city gas distribution (CGD) industry. These companies, responsible for supplying CNG to vehicles and PNG to homes and businesses, are heavily reliant on procurement costs, which significantly influence their operating margins. Gas is sourced through a combination of domestic allocations and imported liquefied natural gas (LNG).
When global energy prices rise, or when geopolitical tensions disrupt supply routes, distributors face a difficult choice: absorb the increased costs, thereby squeezing their own margins, or pass them on to consumers through higher retail prices. The ability to pass on these costs is not unlimited, as significant price hikes for CNG and PNG can impact affordability and competitiveness against alternative fuels, making pricing decisions critical.
IGL's Continued Network Expansion
Despite these profitability challenges, IGL has continued its infrastructure expansion. In FY26, the company added 70 new CNG stations, bringing its total network to 1,024 stations. It also connected over 3.7 lakh new PNG households during the year. IGL's operations span 34 districts across 11 geographical areas, including Delhi, Uttar Pradesh, Haryana, and Rajasthan, managing over 30,000 km of pipelines and serving more than 2.5 million CNG vehicles and 3.5 million households.
The latest financial results underscore a crucial point for the CGD sector: while expanding demand and infrastructure are positive indicators, they do not guarantee higher earnings. For IGL and its peers, the future trajectory of procurement costs, the availability of domestic gas, and the flexibility to adjust retail prices will be paramount in safeguarding margins in the coming quarters.