Summary of earnings call for Mahanagar Gas Ltd published on 07 Nov, 2025

Mahanagar Gas Limited
Q2 FY26
Call date · October 30, 2025

Consolidation of Unison Enviro Private Limited (UEPL) completed, with all financials now reported as a single entity.
Strong infrastructure expansion: 53,566 new domestic household connections, 87.4 km of pipeline laid, 14 new CNG stations (total 485), and 116 new industrial/commercial customers added in the quarter.
CNG vehicle base increased by 27,150 to over 1.22 million.
Overall average sales volume grew 3.11% QoQ and 9.22% YoY to 4.593 MMSCMD.
H1 FY26 volumes up 9.91% YoY; H1 EBITDA at INR839 crores.

EBITDA for Q2 declined to INR338 crores from INR501 crores in Q1; PAT fell to INR193 crores from INR320 crores.
Margins compressed due to higher gas costs (APM and NWG allocation reductions, increased spot RLNG/HPHT procurement, adverse exchange rate, and higher opex).
Industrial/commercial segment margins impacted by lower alternate fuel prices and bulk LPG price reductions.

Capex plans: INR900–1,000 crores for MGL GAs and INR150–200 crores for UEPL GAs in FY26 (total INR1,100–1,200 crores).
Targeting ~80 new CNG stations in FY26; 17 completed as of Q2.
New business initiatives (EV battery manufacturing, EV investments, LNG retail) to have minimal near-term P&L impact; IBC plant capex ~INR800 crores, expected topline INR1,000 crores post-commissioning (1–2 years out).
Margin guidance revised to INR8.5–9 per SCM for H2 FY26, with potential improvement in Q4 as new HPHT term contracts commence.
Focus remains on volume growth (targeting ~10% YoY), with price hikes to be calibrated based on market dynamics.
Ongoing evaluation of M&A/consolidation opportunities; no new GAs announced.
Tax benefits expected from amalgamation, with ~INR35 crores benefit over FY24–25 and lower effective tax rate in coming years.

Q 1 (Composite): What drove the margin decline in Q2, and how will margins evolve in H2 FY26?
A (Management):

Margin decline due to higher gas costs (lower APM/NWG allocation, increased spot RLNG/HPHT, adverse FX, higher opex).
Margin guidance for Q3 at INR8.5 per SCM; Q4 expected to improve with new HPHT term contracts and potential APM price softening.
Focus on balancing volume growth and margin; price hikes to be considered cautiously.

Q 2 (Composite): Can you detail the gas sourcing mix and landed costs?
A (Management):

Q2 sourcing: APM ~1.68–1.7 MMSCMD, NWG ~0.3–0.35, Henry Hub term ~1.45, HPHT (incl. RIL) ~0.6, spot RLNG/HPHT ~0.3–0.4.
Landed costs: APM INR24–25/SCM, NWG/HPHT INR32–38, RLNG up to INR40–42/SCM.

Q 3 (Composite): What are the capex plans and station rollout targets for FY26?
A (Management):

FY26 capex: INR900–1,000 crores (MGL), INR150–200 crores (UEPL).
Targeting ~80 new CNG stations in FY26; 17 completed by Q2, with most additions expected in Q4 post-monsoon.

Q 4 (Composite): How is the company addressing the impact of Maharashtra’s EV policy and new business adjacencies?
A (Management):

EV policy expected to have limited near-term impact on CNG volumes, especially in Mumbai due to infrastructure and operational constraints.
New businesses (EV battery, 3EV, LNG retail) are early-stage; minimal near-term P&L impact, but potential for significant contribution in 7–8 years.

Q 5 (Composite): What is the outlook for volume growth and margin sustainability?
A (Management):

H1 FY26 volume growth at 9.9% YoY; targeting ~10% for full year.
Margin guidance revised to INR8.5–9 per SCM for H2; focus remains on volume-led profitability.
Commercial vehicle segment targeted via ongoing fleet incentive programs and infrastructure expansion.

Q 6 (Composite): What are the financial/tax benefits from the UEPL amalgamation?
A (Management):

Tax benefit of ~INR35 crores over FY24–25 from license cost depreciation; lower effective tax rate expected for next 2–3 years.
GST savings on intra-group transactions; no immediate impact on general reserves due to deferred tax recognition.

Q 7 (Composite): Any updates on new GAs, M&A, or listing of new ventures?
A (Management):

No new GAs or M&A finalized; company remains open to opportunities.
No immediate plans to list IBC or other new ventures; focus is on commissioning and ramp-up.

Q 8 (Composite): How are incentive schemes structured for CNG and industrial/commercial customers?
A (Management):

Fleet program for CNG commercial vehicles now runs year-round, with digital incentives and loyalty benefits.
Incentives for retrofitment based on remaining vehicle life; MOUs with bulk buyers (e.g., state transport).
Industrial/commercial segment offered volume-based incentives and waivers to drive growth.

Total households connected: 2.94 million.
Total pipeline length: 8,061.62 km.
Total CNG stations: 485 as of September 30, 2025.
Total industrial/commercial customers: 5,316.
Total CNG vehicles: >1.22 million.
Q2 average sales volume: 4.593 MMSCMD (CNG: 3.255, DPNG: 0.582, Industrial/Commercial: 0.757).
H1 FY26 average sales volume: 4.524 MMSCMD (CNG: 3.22, PNG: 0.576, Industrial/Commercial: 0.727).
Q2 EBITDA: INR338 crores; Q2 PAT: INR193 crores.
H1 EBITDA: INR839 crores; H1 PAT: INR513 crores.
Q2 EBITDA per SCM: INR8 (down from INR9.68 in Q1).
GA-wise Q2 volumes: GA1 ~1.95–2 MMSCMD, GA2 ~1.95–2, GA3 (Raigarh) ~0.35, UEPL GAs ~0.25.
GA-wise YoY growth: GA1 ~6–7%, GA2 ~10–12%, GA3 >15%.
Vehicles added: Q2 – 27,150; H1 FY26 – 59,400 (vs. 44,500 in H1 FY25); October 2025 – ~10,000.
IBC battery plant capex: ~INR800 crores; expected topline: INR1,000 crores (at 1 GW capacity).
Tax benefit from amalgamation: ~INR35 crores over FY24–25.
Staff cost increase in Q2: ~INR10 crores QoQ (due to pay revision, actuarial valuation, LTA, and awards).
Other income decline attributed to lower mutual fund returns, removal of certain fees, and digitalization impacts.
No specific numbers disclosed for CBG blending proportion; management suggests blended APM+CBG price at INR6.98–6.99/MMBtu.
LNG stations: 2 operational, 3 more planned in FY26.
No new GAs or M&A announced; company remains open to opportunities.