Why is IGL share price falling in 2025?
In Year 2025, Indraprastha Gas (IGL) share price has remained almost flat (down by -3.59%). Can you tell me the reason (macro or fundamentals) which are contributing to this under performance of IGL shares? What is the future outlook (in terms of EPS growth) of IGL in say next 5 years?
This underperformance is primarily driven by two key factors.
- First, the government cut the cheap gas supply (called APM gas) that it gives to gas companies by about 20% starting in April 2025. This forced IGL to buy more expensive gas from other sources, like New Well Gas (of ONGC and Oil India), which reduces how much profit IGL can make.
- Second, Delhi’s EV Policy 2.0 has created uncertainty by proposing a gradual phase-out of CNG-powered vehicles, including a ban on new CNG auto registrations. This is done to reduce air pollution and transition the city to cleaner, zero-emission electric vehicles. This policy directly threatens IGL’s core business since CNG contributes around 30% of its volumes.
From a fundamental side, IGL’s earnings have been under pressure.
Its net profit declined around 13-14% in recent quarters due to rising input costs and subdued volume growth of around 5-6% YoY.
Analysts have downgraded earnings estimates, with brokerages like Jefferies and Citi cutting target prices.
The company’s EBITDA margins have also taken a hit because passing on higher costs to consumers risks hurting demand, especially with elections adding to policy uncertainty.
Analysts project IGL’s EPS growth at approximately 8-9% CAGR over the next 3-5 years. Revenue growth is around 8-9% annually. While near-term challenges persist, IGL remains a leader in the CGD space with long-term demand supported by urban expansion, cleaner fuel adoption (as compared to Diesel and Petrol), and network expansion in new geographical areas.
A potential relaxation in Delhi’s EV policy timeline could also ease some pressure on the growth outlook.
Suggested Reading: A more detailed blog post on the reasons why the IGL share price is falling.
Disclaimer: This content is for informational purposes only and should not be considered investment advice.
