Margin woes emerge for gas distribution companies in Q3 but volumes improve

IGL, Gujarat Gas and MGL have seen profitability contract in Q3

Gas distributors Indraprastha Gas (IGL), Gujarat Gas and Mahanagar Gas (MGL) all declared results for Q3FY22 recently. The story was more or less the same across the three companies. While there were some volume gains, there was sharp margin contractions due to the rising price of LNG. The margin contractions were expected and some investors may write them off as caused by extraordinary combination of geopolitical uncertainties (triggered by the Ukraine tensions) and seasonal demands.

The volume rise is encouraging. If prices soften, this is a positive situation going forward, where margins recover and combine to higher volumes to deliver