Indraprastha Gas Q2 FY27 Earnings Call: EBITDA Turns Negative at Rs. 31 Crore, Record Volumes at 10.06 MMSCMD (IGL)

Indraprastha Gas Ltd held its Q2 FY27 earnings call on October 30, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Volumes and Turnover, But Margins Turn Negative

• Gross turnover of Rs.5,600 crore, up ~26% YoY — the highest-ever quarterly turnover; H1 FY 2026-2027 turnover crossed Rs.10,000 crore.
• Negative EBITDA of Rs.31 crore — driven by considerably higher input gas costs; PBT of Rs.9.5 crore and PAT of ~Rs.24 crore in Q2 FY 2026-2027.
• Record average daily gas sales of 10.06 MMSCMD — first quarter above 10 million SCMD in IGL's history and possibly for any CGD entity in India, vs 9.31 million SCMD in Q2 FY 2025-2026.
• Overall volumes grew ~8% YoY — CNG +~9% (net of BTC/DIAMTS ~10%), PNG +8% with domestic PNG +16%; peak single-day CNG sale of 59 lakh kg.
• Spot LNG share jumped from 3% to 15% of volumes QoQ — 1.5 MMSCMD vs 0.3 MMSCMD in Q1 FY 2026-2027, replacing shortfalls in pooled gas and term RLNG; spot prices hovered around $22/MMBtu in Q2 and have since risen to $30+/MMBtu as of the call.
• Subsidiaries grew well — MNGL volumes ~2.2-2.3 MMSCMD (+20-22%, EBITDA ~Rs.8-9/kg) and CUGL 0.37 MMSCMD (+11%, EBITDA ~Rs.5-6/kg) in Q2 FY 2026-2027.

Force Majeure Curtailments Force Costly Spot Substitution

• Sourcing mix: domestic gas ~48-50%, RLNG ~52% — domestic split APM ~40% and new well gas ~10%; spot RLNG was ~15% of the RLNG portion in Q2 FY 2026-2027.
• Aggregate contracted long-term LNG not received is almost 1.5 MMSCMD — force majeure-type issues with Qatar and multiple suppliers mean IGL is not receiving 100% of contracted quantities; contracts have shifted from source-specific to portfolio-based supply.
• Government discontinued the pooled gas mechanism — a total supply cut of almost 1.2 MMSCMD vs the previous quarter, primarily from pooled gas allocation; the hit is price-driven since domestic allocation was "more or less same".
• Traditional Qatar long-term receipt was close to 0.6 MMSCMD — portfolio-based contracts now make supplier-level quantification difficult.
• Mitigation levers in motion — reducing spot proportion, negotiating additional moderately priced long-term volumes, and relying on term LNG inflows; management noted past curtailment moved from 70% to 80% overnight but believes the situation may get resolved.
• Government intervened with HPHT gas at ~$9.8/MMBtu — enhanced allocation as mitigation for the elevated spot burden.

Consumption-Based HPHT Allocation Phases In Through FY 2027-2028

• Government shifted HPHT allocation to a consumption-based basis — an October 2026 clarification replaced the earlier bidding mechanism (which was disproportionate to IGL's consumption), with a further revision effective 1 November 2026.
• Phased ramp: 25% in Q3 FY 2026-2027, 50% in Q4 FY 2026-2027, 75% in Q1 FY 2027-2028, 100% by September FY 2027-2028 — per the government clarification.
• ~4 million (units unspecified) of HPHT gas is available in the country — IGL received 1 million in October (Q3 FY 2026-2027), expects almost 1 million after one year (FY 2027-2028), though the November revision reduces this to ~0.4 for the remainder of Q3 FY 2026-2027.
• Government launched PNG 3.0 and moderated pipeline charges — MD Kumar Shankar noted considerably moderated pipeline laying and permission charges and reduced clearance windows, which management sees as a good opportunity to build infrastructure.
• TERI report, released by a special advisor to the Prime Minister — concludes CNG "retains and will continue to retain a strong position" across passenger segments and can serve as an important intermediate pathway towards 2050; cited as industry context, not a company commitment.
• CAQM notification has already come — zero-emission transition in Delhi NCR with BS-4 vehicle phase-out by 2030 (per the analyst's framing of the recommendation); under the Delhi government's EV policy, new CNG three-wheeler registrations stop from 1 January (year not specified), N1 vehicles switch to EV, and 30% of school buses convert to EV by 2030.

Broad-Based Volume Growth Despite DTC and DIMS Erosion

• CNG vehicle additions/conversions averaged ~27,000/month — over the trailing 6 months to Q2 FY 2026-2027; 25% of new vehicles registered in July 2026 were CNG, underpinning management's confidence in underlying demand.
• Newer geographies grew 34% — Delhi NCR CNG sales (ex-DTC and dense volumes) +10.2% in Q2 FY 2026-2027; outside-GA areas currently growing ~30%.
• DTC is "all gone" — September 2026 average was hardly 50k/day; at least 15 ex-DTC stations remain operational, some converted to retail; DIMS volumes are degrowing (H1 FY 2026-2027 average 1.34 lakh kg/day vs 1.47 lakh kg/day FY 2025-2026 full-year average, ~1,700 vehicles in system).
• Network expanded — steel pipeline +~21 km, MDP network +~827 km, 1 lakh domestic PNG customers added (>1.32 lakh new connections), 537 industrial/commercial customers connected, ~7 new CNG stations; 1,031 CNG stations as of 30 September 2026.
• Vehicle mix broadly unchanged vs Q1 FY 2026-2027 — PV ~50%, commercial 19%, taxis 14%, buses 12%, three-wheelers ~8% of CNG sales; average monthly per-vehicle consumption value rose to ~Rs.27,000 from ~Rs.25,000-26,000.
• LPG-free zones and institutional MOUs — Kidwai Nagar East & West, Nivedita Kunj and New Moti Bag declared 100% PNG connectivity; MOUs with Delhi Cant, universities, railways, defence and other government institutions for exclusive PNG supply.

Deliberately Cautious on Price Hikes; Willing to Absorb Near-Term Pain

• Management is deliberately cautious on price increases — to preserve CNG's delta versus petrol/diesel and sustain long-term volumes.
• "Short term... it will be a pain" — management acknowledged Q3 FY 2026-2027 margins may not match Q2 without price hikes and indicated willingness to live with losses in the near term to protect/grow CNG market share.
• Pricing lever "is always there" — management pushed back on the inference that no price hike is planned near-term, clarifying it is being looked at.
• Industrial EBITDA margin of Rs.7-8 per SCM in Q2 FY 2026-2027 — after back-to-back pass-through of gas costs; CFO Manjit Gulati noted margins depend on gas cost allocation across segments (LNG to CNG, some to industrial); losses are not entirely on CNG since domestic PNG is supplied from domestic gas.
• CNG break-even price withheld — CFO Manjit Gulati declined to share the CNG price required to break even, terming it a commercial subject for this forum.
• Pricing measures under consideration — including acceleration in compressed biogas potential, to manage the impact of the global environment and geopolitical issues.

Capex Maintained Through the Dip; FY 2027-2028 Guidance of ~6-7

• Capex of ~Rs.712 crore in H1 FY 2026-2027 — similar pace planned for H2 FY 2026-2027; FY 2026-2027 capex guided at Rs.1,700-1,800 crore despite weak cash flows, as management calls the pressure a temporary phenomenon.
• FY 2027-2028 guidance maintained at around 6-7 — stated in response to a question on volume and EBITDA/SCM guidance, with management believing geopolitical conditions will ease; 100% of long-term contracts are in place and HPHT coming into the fold should help.
• Supply security for ~10% volume growth addressed as early as FY 2027-2028 — three levers: 100% of envisaged volumes contracted up to CY27-end and mid-CY28 with 60-70% take-or-pay (total contracted volume exceeding the 1.5 MMSCMD shortfall); additional volumes within existing long-term contracts; additional HPHT volumes.
• Additional contracted volumes expected from calendar year 2027 onwards — some contracts already carry graded calendar-year volume escalation provisions; Q3 FY 2026-2027 sourcing mix broadly unchanged apart from incremental HPHT, with Q4 FY 2026-2027 expected to see even more.
• Spot RLNG share expected to ease to ~11-12% in Q3 FY 2026-2027 — from 15% in Q2, on flat volumes ex-growth, with delta incremental HPHT supplies in November-December; MD Kumar Shankar said Q3 is "very difficult to say" as contracted term LNG is being replaced by spot, which is "quite tight and highly priced".
• EV transition risk quantified at ~2 lakh kg/day of CNG volume — N1-category school buses and CNG three-wheelers going off in a phased manner, cumulative by 2030; existing CNG vehicles phase out over 15 years (~5,000-6,000 autos per year from ~1 lakh in Delhi, period unspecified); management still envisages double-digit growth as "very promising" on new-vehicle additions (period unspecified).
• No pre-cutoff surge expected in Delhi — ahead of the January 2027 cutoff, Delhi's permit-based cap restricts new CNG three-wheeler additions (any increase would be EV-only); in other GAs, additional CNG three-wheeler sales can still occur; management rebutted the Nomura analyst's aggregator concern, stating neither the draft nor final EV policy mandates aggregators to move to complete EVs by 2030.