Indraprastha Gas Ltd, the firm that retails CNG and piped cooking gas in the national capital and other cities, reported 11% drop in third quarter net profit after it held retail prices despite rise in input cost.
Consolidated net profit of Rs 334.06 crore in October-December 2022 is compared with Rs 374.76 crore a year back, according to the company’s filing with stock exchanges.
The firm saw more than doubling of the cost it incurs on procuring natural gas, which is converted into CNG for sale to automobiles and piped to household kitchens for cooking purposes.
Revenue from operations soared to Rs 4,089.03 crore in the third quarter of current fiscal year from Rs 2,438.48 crore in the year-ago period.
“For the quarter ending December 2022, IGL registered an overall sales volume growth of 6 per cent over the corresponding quarter in the last fiscal, with the average daily sale going up from 7.66 million standard cubic meters to 8.12 million standard cubic meters per day,” a company statement said.
Product wise, CNG recorded sales volume growth of 8%, while piped natural gas recorded sales volume growth of 1% in the quarter as compared to the corresponding period last year.
Gross margins declined 4.5% year-on-year and 11% quarter-on-quarter.
“IGL increased CNG and domestic PNG prices in the third quarter of 2022-23 fiscal on account of the revision in domestic gas prices Oct. 1 onwards. However, these price hikes were not sufficient enough to pass on the increase in gas costs which impacted their margins,’ ICICI Securities said in a commentary on the earnings.
Going forward, the Kirit Parikh committee has suggested a price band of $4-6.5 per million British thermal unit for regulated gas produced within the country.
Spot LNG prices have softened to $26 per mmBtu in the current quarter from the elevated level of $31 seen in Q3 and the decline in crude prices is likely to bring down the long-term gas prices too.
“All these developments would reduce the sourcing cost for city gas distributors and improve their margins and also likely bring down CNG and PNG prices. Volume growth coupled with steady margins will be key monitorable in the near term,” ICICI Securities added.