Attractive valuations of city gas distributors after recent price fall

Domestic gas consumption in CGD declined to 26.5 mmscmd in January

Recent price cuts by city gas distribution (CGD) companies and a statement issued by the petroleum minister citing high profits have had a negative impact on sentiment about the sector. It has resulted in sharp dips in the share prices of Mahanagar Gas (MGL), Indraprastha Gas (IGL), and Gujarat Gas.

However, the Petroleum and Natural Gas Regulatory Board (PNGRB) has subsequently clarified that it does not intend to regulate CGD margins. Also, there has been a fall in liquefied natural gas or LNG prices, which is being passed on in the price cuts. As a result, we could make a