Positive Trigger for IGL, MGL & Gujarat Gas: APM Price Cut to Boost Margins

India’s city gas distribution (CGD) companies — Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL), and Gujarat Gas — received a significant boost as the government announced a sharp cut of over 5% in the price of APM (Administered Pricing Mechanism) gas overnight.

This move is expected to improve profit margins and enhance earnings potential in the coming fiscal year.

 

Key Highlights

APM Gas Price Cut: >5% reduction, effective immediately

Impact on Margins: Positive margin expansion across CGD players

EPS Growth Forecast (FY26E):

IGL: ↑ 4%

MGL: ↑ 5%

Gujarat Gas: ↑ 4.2%

 

Analysts’ View

Market analysts are optimistic about the impact of the APM gas price cut. According to a Jefferies note:

“Lower input costs from APM gas will flow directly into margin gains for CGD companies. This will be earnings accretive starting FY26, as most of these players benefit from fixed-price supply contracts and retail pricing flexibility.”

What This Means for Investors

Earnings Boost: Lower input costs will lift operating margins and profit per share

Stock Sentiment: Bullish outlook may lead to upward revisions in stock price targets

Sectoral Advantage: CGD players like IGL, MGL, and Gujarat Gas now hold a stronger pricing advantage in both domestic and commercial gas distribution

 

Conclusion

The APM gas price cut is a welcome relief for India’s city gas companies. With enhanced margins and projected EPS growth, IGL, MGL, and Gujarat Gas are positioned as attractive picks in the energy sector going into FY26.