Citi has reiterated its Buy rating on Indraprastha Gas Ltd (IGL) and raised its target price to ₹270, implying a potential upside of 19.1% from the current market price of ₹226.72. The upgrade comes after the Petroleum and Natural Gas Regulatory Board (PNGRB) approved new pipeline tariff regulations that are expected to lower IGL’s gas transportation costs.
Citi has revised its EBITDA margin assumptions for FY26–28E upwards, from ₹6.5–7/scm to ₹7–7.5/scm, in anticipation of cost savings from the new tariff regime. As per the revised structure, the unified pipeline tariff system will move from a 3-zone to a simplified 2-zone system, with zone 1 tariffs now applicable to all city gas distributors (CGDs) for compressed natural gas (CNG) and domestic PNG volumes.
IGL is likely to be a key beneficiary of this change, as it has historically operated under zones 2 and 3, where tariffs were significantly higher. The shift to zone 1 pricing is expected to boost margins and improve overall profitability in the medium term.
Disclaimer: The views expressed above are those of Citi and do not constitute investment advice. This article is for informational purposes only.
