Shares of Mahanagar Gas fell sharply by more than 6% on Wednesday after the government reduced the supply of cheap APM gas (gas under the Administrative Price Mechanism) by 18%, starting from April 16.
The company’s stock dropped as much as 6.47% during the day, hitting ₹1,230 per share — the biggest single-day fall since November 18 last year. Later, it slightly recovered and was trading 5.28% lower at ₹1,246.2, while the Nifty 50 index went up by 0.17% at 9:58 AM.
This drop in stock price ended a two-day winning streak for Mahanagar Gas. So far this year, the company’s shares have declined by 2.5%, while the Nifty 50 has dropped by 1.2%. The company currently has a market value of ₹12,258.8 crore, according to BSE data.
The cut in APM gas supply is being replaced with costlier “new-well intervention gas” (NWG), according to a filing made by the company. Mahanagar Gas said this change would negatively impact its profits, and it is currently looking for ways to reduce the effect.
Read More: Breaking: India Increases Domestic Gas Prices—First Time Since 2023
With less APM gas available, city gas distribution (CGD) companies like Mahanagar Gas may have to deal with higher input costs. Experts say this could lead to another increase in CNG prices, possibly by ₹0.6 per kg. Mahanagar Gas and Indraprastha Gas had already increased their prices earlier this month.
On the same day, shares of Adani Total Gas and Indraprastha Gas also dropped by 1.6% and 3.8%, respectively.
As per a recent policy update, APM natural gas produced in India will be supplied to city gas companies mainly for Domestic PNG and CNG usage. The supply will depend on the availability and allocation made to GAIL (India) Limited for these segments.
Mahanagar Gas (MGL) supplies compressed natural gas (CNG) and piped natural gas (PNG) to households, businesses, and industries in Mumbai, Thane, and Raigad. The company has a large network with 348 CNG stations and over 6,000 km of gas pipelines.
