A Dip in Profit Despite Strong Revenue Growth – What’s Going On?

Indraprastha Gas Limited (IGL) reported a 31% decline in net profit for Q3FY25, dropping to ₹325.42 crore, compared to ₹475.45 crore in the same quarter last year. The drop in profit came amid lower APM gas allocation for city gas distribution (CGD) companies, impacting margins.

Key Highlights:

Net profit: ₹325.42 crore, down 31% year-on-year.
Revenue from operations: ₹4,146.09 crore, up from ₹3,926.19 crore last year, reflecting a growth in business.
The decline in profit was due to reduced APM gas allocation affecting costs.

Revenue Grows, But Profit Takes a Hit

While IGL’s revenue from operations showed a healthy increase, rising by ₹219.9 crore from the previous year, the 31% drop in net profit highlights the challenges posed by higher gas procurement costs. Despite this, the company’s operational performance remained robust, with growth in CNG volumes and piped natural gas (PNG) volumes.

Important Points:

Revenue growth: ₹4,146.09 crore, a 5.6% increase year-on-year.
Net profit drop: 31% decline despite revenue growth.
Profit was affected by APM gas cuts, impacting margins.

CNG and PNG Volumes Show Impressive Growth

Despite the profit squeeze, IGL’s CNG volumes saw a solid 6% growth, reaching 616.61 million SCM, while domestic PNG volumes grew by an impressive 17%, and industrial/commercial PNG saw a 14% rise. These increases suggest that IGL is successfully expanding its market share, even as regulatory pressures loom.

Key Performance Metrics:

CNG volume growth: 6% increase to 616.61 million SCM in Q3FY25.
PNG volume growth: 17% increase in domestic volumes, and 14% growth in industrial/commercial volumes.
Total volumes: Rose by 7%, reaching 9.11 MMSCMD.

Stock Performance: A Slight Dip

On January 27, IGL’s shares fell by 1.45%, closing at ₹377.65 on the BSE. This dip reflects market concerns over the company’s profit decline despite positive volume growth.

Stock Update:

IGL share price: ₹377.65, a decline of 1.45% from the previous day.
Market sentiment: The drop in profit weighed on investor sentiment, despite growth in volumes.

The Road Ahead for IGL: Can Profitability Recover?

As APM gas allocation continues to impact profit margins, the company will need to find ways to manage costs effectively. The growth in CNG and PNG volumes is a positive sign, but regulatory changes and gas price fluctuations could determine whether IGL can maintain its profitability trajectory.

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