MGL shares in focus as government cuts APM gas allocation by 18% from April 16

Mahanagar Gas Limited (MGL) has informed the exchanges that the allocation of Administrative Price Mechanism (APM) natural gas to the company has been reduced by approximately 18%, effective April 16, 2025. This reduction pertains specifically to Domestic PNG and CNG (Transport) segments, as per the Policy Guidelines of the Ministry of Petroleum and Natural Gas dated August 10, 2022.

The shortfall in APM gas supply has been substituted with New Well/Well Intervention Gas (NWG), which is typically costlier. The company noted that this shift is expected to adversely impact profitability. However, MGL is currently evaluating steps to mitigate the financial impact of this change.

The reduction in APM allocation and its replacement with more expensive gas sources could lead to higher input costs, potentially affecting margins unless offset by tariff adjustments.

On April 15th at the time of closing (3:30 PM) the shares of MGL were trading 2.73% higher at ₹1,312.40 on NSE.

 

Business Upturn reported on April 11th that 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.