Shares of Mahanagar Gas Limited (MGL) fell over 3% from the day’s high of ₹1,286 to ₹1,256 in Friday’s trade, despite opening on a positive note. The stock was last seen trading 0.91% higher, but off sharply from its peak following reports indicating a fresh round of cuts in APM gas allocation.
According to analysts, the government may reduce the APM gas allocation to city gas distribution (CGD) companies from 50% to 40%. This shortfall will be filled with higher-cost gas sourced from new wells, increasing input costs for CGD players like MGL.
The development sparked cautious sentiment among investors, with MGL’s intraday gains quickly narrowing as traders priced in the potential margin pressure. APM gas, being cheaper, plays a crucial role in cost-effective distribution, particularly for domestic and CNG segments.
At the time of reporting, Mahanagar Gas was trading at ₹1,256 with a market cap of ₹123.37 billion and a P/E ratio of 11.80.
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