IGL says impact of Delhi EV policy was overstated

Kamal Kishore Chatiwal, Managing Director of Indraprastha Gas (IGL), addressed concerns about the Delhi Electric Vehicle (EV) Policy's impact on IGL's business in a chat with CNBC-TV18. He clarified that the policy's immediate effect on IGL would be minimal, estimating less than a 3-4% impact, contrary to initial fears.

In October, the Delhi government mandated that 100% of all cab aggregators and delivery service providers switch to EVs by the calendar year 2030. The policy entails 5% EVs in fleet of the likes of Uber and Ola in six months, 50% in three years and the rest 100% in five years.

Brokerage firm Jefferies estimated a potential 30% hit on IGL volumes from FY25 onwards. It downgraded FY25 and FY26 earnings per share (EPS) by 7% to 9%, adding that lower valuation multiple to factor in growing EV risk.

Chatiwal acknowledged a decrease in volumes from the Delhi Transport Corporation (DTC) as 6% share of the bus segment is expected to shift towards electric vehicles.

Highlighting the National Capital Region (NCR) as a success story in city gas distribution (CGD), Chatiwal pointed to the significant growth potential through geographic expansion. He emphasised the impressive 25% growth rate in the CNG sector, mirroring a similar expansion in the auto sector.

Chatiwal also mentioned IGL's expansion beyond the Delhi-NCR region, aiming to end the year with a supply capacity of nearly nine million mmscmd/day. He addressed the pricing challenges in the Piped Natural Gas (PNG) segment for industrial customers, citing the absence of goods and services tax (GST) and plans to adjust PNG pricing.

Chatiwal noted the stability of spot gas prices around $11-12/mmbtu. He shared IGL's ongoing expansion in Haryana, Rajasthan, and Uttar Pradesh, including setting up Liquefied Natural Gas (LNG) stations. Contradicting any notion of reduced capital expenditures, he expects a strong 9-10% growth in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) per standard cubic meter (scm), aiming for around ₹8 per scm.