CLSA has highlighted diverging trends in India’s gas market, with overall demand remaining weak in July but CNG vehicle sales in Delhi showing strong growth momentum. The brokerage said these mixed signals could weigh differently on midstream gas companies and city gas distributors in the coming quarters.
According to CLSA, weak demand trends are likely to feed into second-quarter volumes for midstream gas companies such as GAIL, Petronet LNG (PLNG) and Gujarat State Petronet (GSPL). This softness, it said, could temper earnings momentum in the near term.
However, the report noted a sharp rebound in CNG vehicle sales in Delhi, which rose 27 percent year-on-year in August, aided by strong commercial vehicle additions. This is expected to support Indraprastha Gas (IGL)’s volume growth trajectory. In contrast, CNG growth in Mumbai was in low single digits, which could weigh on Mahanagar Gas (MGL)’s volumes in the coming quarters.
CLSA also pointed out that a further cool-off in LNG prices could emerge as a key medium-term tailwind for city gas distributors such as Gujarat Gas (GGas), helping them regain competitiveness and expand volumes.
Disclaimer: The views and investment recommendations expressed above are those of CLSA. They do not represent the views of this publication. This article is for informational purposes only and is not investment advice.
