Global brokerage firm Nomura has named MGL as its top pick, maintaining a ‘Buy’ rating with a price target of ₹1,680 per share.
Nomura favours MGL due to its highest expected volume growth among peers, limited exposure to the volatile industrial and commercial (I&C) segments, and attractive valuation compared to its competitors. The brokerage also said that MGL is better positioned than IGL to handle EV-related regulatory challenges.
In contrast, Nomura sees Gujarat Gas as the least preferred due to high competitive intensity in the industrial segment. However, a potential positive trigger for GGL could be the inclusion of natural gas under GST. This would particularly benefit GGL, given its significant exposure to I&C customers, who could then offset GST through input tax credits. Nomura has a ‘Reduce’ rating on GGL, with a price target of ₹406 per share.
For Indraprastha Gas (IGL), Nomura maintains a ‘Neutral’ rating, with a price target of ₹210 per share.
The brokerage wrote in its note that the decline in Administered Price Mechanism (APM) gas allocation presents a near-term challenge, though it is manageable through price hikes.
An 18–20% reduction in APM gas allocation, announced in April 2025, has led to a supply shortfall of low-cost APM gas for priority sectors such as CNG and domestic PNG. IGL is the most affected, given its high dependence on CNG, which accounts for 73% of its total sales. However, Nomura pointed out that both IGL and MGL have implemented reasonable price hikes over 2% in both CNG and domestic PNG segments during the quarter so far.
EV policies by states to continue pressuring CNG growth
Meanwhile, state-level EV policies are expected to continue putting pressure on CNG demand.
Both Delhi and Mumbai are planning aggressive policy incentives to promote EV adoption in response to worsening air quality. With Delhi having already banned diesel vehicles older than 10 years nearly a decade ago, Nomura believes that CNG vehicles could be the next target of stricter regulations.
Inclusion of gas under GST could benefit GGL the most, Nomura says
Natural gas is currently subject to multiple indirect taxes, including state VAT, central excise duty, and central sales tax.
GST would eliminate these cascading taxes, streamlining the tax structure and potentially reducing the overall tax burden on businesses. The highest impact of the GST regime on gas will likely be felt by industrial and commercial customers.
Additionally, a lower CNG price will make it more competitive against propane in the Morbi ceramics industry. Companies could claim input tax credit (ITC) on gas purchases, we believe, which could offset the GST paid, potentially lowering their overall costs.
