Explained — Key factors behind the surge seen in IGL, MGL shares on Wednesday

Shares of city gas distribution (CGD) companies Indrprastha Gas Ltd. (IGL) and Mahanagar Gas Ltd. (MGL) gained as much as 4.5% on Wednesday, December 17, after the Petroleum and Natural Gas Regulatory Board (PNGRB) notified the new Unified Natural Gas tariff structure, which will be effective from January 2026.

The new policy will reduce tariff zones from three to two, one of which will be up to 300 kilometers, and the other will be beyond 300 kilometers.

Consumers of CNG and domestic PNG will pay Zone-1 tariffs across India, irrespective of the distance, as per the new norms.

As a result of these new norms, CNG prices will fall between ₹1.25 to ₹2.5 per kg, while domestic PNG prices will improve by ₹0.9 to ₹1.8 per Standard Cubic Meter (SCM).

The new transportation tariffs, which will be effective from January 2026, will be ₹54 per million metric British thermal unit (MMBtu) for up to ₹300 kilometers, and ₹102.86 per MMBtu, for distance beyond 300 kilometers.

CNG and domestic PNG customers will be charged a standard rate of ₹54 per MMBtu, pan India.

Brokerage firm Nomura has upgraded shares of Indraprastha Gas to "buy" from its earlier rating of "neutral" on attractive valuations, and also raised its price target to ₹230 from ₹215 earlier.

Nomura believes that IGL's margins will receive support from lower taxes and transmission tariffs and anticipates support to margins from the first quarter of financial year 2027.

Domestic gas sourced from Gujarat will now have a tax rate of 2% from the 15% earlier. The brokerage also expects henry hub prices to cool off from current levels.

Shares of IGL are currently trading 3.4% higher at ₹189.7, while those of MGL are trading 2.7% higher on Wednesday at ₹1,141.9. IGL shares are down 7% so far in 2025, MGL shares are down 11% year-to-date.