Gas distribution shares soar as competition overhang lifts

The oil and gas regulator, Petroleum and Natural Gas Regulatory Board’s (PNGRB’s) gazette notification for city gas distribution (CGD) removes a major overhang on competition for CGD companies. The share price of Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL), which have significant exposure to metro regions of NCR and Mumbai, closed 9.5 % and 13.7% higher, respectively, on Friday. Shares of Gujarat Gas, too, gained 4%.

CGD firms had marketing exclusivity in key geographical areas, which was about to end. There was also the fear that competition from oil and marketing companies would eat into market share, especially as CGDs share fuel outlets with oil marketing companies (OMCs) in metros.

PNGRB’s notification, however, has given concessions, protecting the existing CGD business of firms.