IGL shares plunge nearly 10% as Q2 EBITDA swings to loss, profit falls 89%

Indraprastha Gas Limited (IGL) shares plunged nearly 10% after Q2 FY27 EBITDA swung to a loss and net profit fell 89% year-on-year, despite total sales volumes growing 7% YoY — pointing to severe margin compression from higher gas input costs relative to retail selling price caps.

• IGL Q2 EBITDA swung to a loss — a dramatic deterioration from profitability, indicating cost-to-price squeeze in CNG and PNG segments
• Net profit fell 89% YoY — extreme earnings compression despite 7% volume growth signals structural margin erosion
• Total sales volumes averaged 10.06 mmscmd — marginally above poll estimates of 10 mmscmd, showing volume resilience despite financial stress

IGL's Q2 results are a stark illustration of the structural challenge facing city gas distribution (CGD) companies in India. The government regulates retail CNG and PNG prices while input gas costs (APM gas allocation, HPHT gas) have risen significantly. When input costs exceed regulated retail prices, the result is negative unit margins — which is what appears to have happened at IGL in Q2. This is not an operational failure; it is a policy failure that hits shareholders regardless of how well the company manages its operations.

The 89% profit collapse on the back of 7% volume growth is actually worse than a volume-driven decline — it confirms that the problem is purely on the margin side. Every CNG and PNG unit sold is contributing negatively to EBITDA, making higher volumes counterproductive from a profitability standpoint until gas prices are revised upward or input costs decline.

For investors in the CGD sector, the IGL results raise urgent questions about MGL (Mahanagar Gas) and Gujarat Gas, which face similar regulatory pricing structures. If the government does not revise CNG/PNG retail prices upward in the coming months, the entire listed CGD sector could face similar earnings pressure in subsequent quarters. Petronet LNG's Q2 results — due today — will provide additional context on LNG input cost trends.

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