IGL Shares Rally 5% as Lower Gujarat Gas Tax Seen Boosting Margins by Up to 22%

Shares of Indraprastha Gas Ltd (IGL) surged over 5% on October 7, driven by optimism that the company will benefit from a sharp reduction in tax rates on gas sourced from Gujarat. According to CNBC-Awaaz, effective October 1, the tax on inter-state gas supply from Gujarat has dropped to 2% Central Sales Tax (CST) from the earlier 15% Value Added Tax (VAT). The development significantly lowers sourcing costs for city gas distributors (CGDs) like IGL, which procure natural gas from Gujarat. A note by Equirus Securities said IGL is likely to be a major beneficiary, estimating an 18–22% improvement in EBITDA due to the tax change. Other city gas peers also gained — GAIL India ended near the day’s high, while Mahanagar Gas (MGL) closed 2% higher. The Gujarat government previously levied 15% VAT on gas sold within the state, both domestic and imported. This higher non-refundable tax inflated the landed cost of gas for out-of-state buyers. From October 1, ONGC has begun levying only 2% CST for inter-state sales to CGDs, fertilizer companies, and power producers, reducing the effective tax burden. IGL had earlier made representations to the Gujarat government seeking a rationalization of the tax structure. During the June quarter results, Managing Director K.K. Chatiwal had indicated that the company expected progress on the issue within 3–4 months. In Q1 FY26, IGL reported a 6% YoY rise in total volumes, with CNG up 6% and PNG up 10%. EBITDA per SCM (standard cubic meter) rose 33% YoY to ₹6.16, adjusted for a one-time hit in Q4FY25. The management has guided for EBITDA margins in the ₹7–8 per SCM range, citing tax rationalization as a key tailwind. #IGL #CityGas #NaturalGas #GAIL #MGL #ONGC #EnergyStocks #TaxReform #StockMarket #EBITDAGrowth