Indraprastha Gas Limited (IGL) reported a 93.5% year-on-year decline in standalone net profit to ₹24.38 crore in the second quarter of FY27, compared with ₹372.51 crore in the corresponding quarter last year. The sharp fall came as natural gas procurement costs increased significantly faster than revenue, squeezing the company’s operating margins.
The decline was particularly striking because IGL continued to record growth in demand. Average daily gas sales crossed 10 million standard cubic metres per day (mmscmd) for the first time, while revenue from operations increased 26.3% to ₹5,613.62 crore. The results highlight how higher gas sales do not necessarily translate into stronger profits when input costs rise sharply.
Key Takeaways
- IGL’s standalone Q2 FY27 net profit fell 93.5% to ₹24.38 crore.
- Revenue from operations increased 26.3% to ₹5,613.62 crore.
- Natural gas purchases surged 47.9% to ₹4,646.01 crore.
- Total expenses increased 40.1% to ₹5,789.92 crore.
- EBITDA turned negative at ₹31.11 crore, compared with ₹442.83 crore a year earlier.
- Average daily gas sales rose 8% to a record 10.06 mmscmd.
- Consolidated net profit declined 93.8% to ₹23.75 crore.
- First-half standalone profit dropped 71.1% to ₹210.56 crore.
IGL Q2 FY27 Results: Revenue Grows but Profit Collapses
IGL’s September-quarter results reveal a sharp divergence between business growth and profitability.
The company generated higher revenue from its CNG and PNG businesses, but the increase in procurement expenses significantly exceeded the growth in sales.
Standalone financial performance
| Financial metric | Q2 FY27 | Q2 FY26 | Change |
|---|---|---|---|
| Revenue from operations | ₹5,613.62 crore | ₹4,445.89 crore | +26.3% |
| Other income | ₹185.89 crore | ₹162.57 crore | +14.3% |
| Total income | ₹5,799.51 crore | ₹4,608.46 crore | +25.8% |
| Natural gas purchases | ₹4,646.01 crore | ₹3,141.49 crore | +47.9% |
| Total expenses | ₹5,789.92 crore | ₹4,133.10 crore | +40.1% |
| Profit before tax | ₹9.59 crore | ₹475.36 crore | -98.0% |
| Net profit | ₹24.38 crore | ₹372.51 crore | -93.5% |
| EPS | ₹0.15 | ₹2.66 | — |
Source: IGL’s unaudited standalone financial results. Figures are rounded where appropriate.
The most important number is the 47.9% increase in natural gas purchases. Procurement expenses reached ₹4,646.01 crore, compared with ₹3,141.49 crore in the year-ago quarter.
This increase significantly outpaced revenue growth of 26.3%.
As a result, profit before tax fell to just ₹9.59 crore from ₹475.36 crore.
The reported net profit of ₹24.38 crore was also supported by a net tax credit of ₹14.79 crore. This makes the decline in underlying operating performance particularly important.
Natural Gas Procurement Costs Squeeze Margins
Natural gas is the primary input for IGL’s city gas distribution business.
The company purchases natural gas and supplies it to customers through two major categories:
- Compressed natural gas (CNG), primarily used by vehicles.
- Piped natural gas (PNG), supplied to households and commercial and industrial customers.
When gas procurement prices rise, distributors must decide whether to absorb the additional cost or increase retail prices.
Passing on the entire increase immediately may affect affordability and demand, particularly in the CNG segment, where consumers can consider alternative fuels.
IGL’s latest results show how this pressure can affect profitability. Even with higher sales volumes and revenue, the company recorded a negative EBITDA.
EBITDA performance
| Metric | Q2 FY27 | Q2 FY26 |
|---|---|---|
| EBITDA | -₹31.11 crore | ₹442.83 crore |
| EBITDA margin | -1% | 11% |
The swing from positive EBITDA to negative EBITDA indicates that the company’s operating expenses and procurement costs overwhelmed its operating income during the quarter.
Record Gas Sales Fail to Protect Profitability
Despite the earnings decline, IGL recorded a milestone in its operating performance.
Average daily gas sales reached 10.06 mmscmd in Q2 FY27, compared with 9.31 mmscmd in the corresponding quarter last year.
This was the first time the company’s average daily sales crossed the 10 mmscmd threshold.
Sales volume comparison
| Sales category | Q2 FY27 volume | Q2 FY26 volume | Growth |
|---|---|---|---|
| CNG | 696.63 million SCM | 639.90 million SCM | +9% |
| Domestic PNG | 73.31 million SCM | 63.14 million SCM | +16% |
| Industrial and commercial PNG | 109.35 million SCM | 106.94 million SCM | +2% |
| Total gas sales | 925.59 million SCM | 856.70 million SCM | +8% |
| Average daily sales | 10.06 mmscmd | 9.31 mmscmd | +8% |
CNG remained IGL’s largest business segment by volume. Its sales increased 9%, reflecting continued demand from the transportation sector.
Domestic PNG volumes grew faster, increasing 16%. Industrial and commercial PNG volumes recorded more modest growth of 2%.
The figures suggest that customer demand remained relatively resilient despite the challenging cost environment.
CNG and PNG Revenue Both Increase
IGL also reported growth in sales revenue across its major business categories.
| Business segment | Q2 FY27 net sales | Reported growth |
|---|---|---|
| CNG | ₹3,521.84 crore | +17% |
| PNG | ₹1,578.20 crore | +56% |
PNG sales recorded particularly strong revenue growth. However, revenue growth does not necessarily indicate an equivalent increase in profitability because procurement costs, product mix and pricing all influence margins.
The company will need to improve the relationship between selling prices and gas acquisition costs to restore its earnings performance.
Consolidated Net Profit Also Falls 93.8%
IGL’s consolidated results showed a similar decline.
Consolidated net profit dropped to ₹23.75 crore in Q2 FY27 from ₹384.95 crore in the year-ago quarter.
| Consolidated financial metric | Q2 FY27 | Q2 FY26 |
|---|---|---|
| Revenue from operations | ₹5,615.38 crore | ₹4,445.96 crore |
| Total income | ₹5,751.39 crore | ₹4,540.86 crore |
| Profit before tax and share of associates | -₹43.20 crore | ₹404.98 crore |
| Share of profit from associates | ₹52.23 crore | ₹82.65 crore |
| Net profit | ₹23.75 crore | ₹384.95 crore |
IGL’s consolidated performance also reflected lower contributions from its associate companies, Maharashtra Natural Gas Limited and Central UP Gas Limited.
Their combined contribution to profit declined to ₹52.23 crore from ₹82.65 crore.
IGL’s First-Half FY27 Performance
The pressure was not limited to the September quarter. IGL’s first-half results also showed a substantial decline in profitability.
| Financial metric | H1 FY27 | H1 FY26 | Change |
|---|---|---|---|
| Revenue from operations | ₹10,653.77 crore | ₹8,772.49 crore | +21.4% |
| Net profit | ₹210.56 crore | ₹728.45 crore | -71.1% |
| EBITDA | ₹264.39 crore | ₹954.58 crore | -72.3% |
| Average daily gas sales | 9.86 mmscmd | 9.22 mmscmd | +6.9% |
The first-half figures reinforce the extent of margin pressure. Revenue increased by more than 21%, but net profit declined by over 71%.
The company’s recovery will therefore depend on improving margins rather than simply increasing gas sales.
The Bigger Picture
IGL’s results highlight a broader challenge for India’s city gas distribution industry. Demand for CNG and PNG can continue to grow, but distributors remain exposed to changes in domestic gas availability, imported LNG prices and procurement costs.
The economics of the business depend on the difference between the cost of acquiring gas and the price at which it can be sold. When that gap narrows sharply, higher sales volumes may not translate into higher profits.
For investors, the September quarter demonstrates why revenue and volume growth alone are insufficient to assess a city gas distributor’s performance. Procurement costs, EBITDA margins and the ability to pass on price increases are equally important.
Looking Ahead
Investors will watch whether IGL can improve its procurement mix, manage gas costs and adjust retail pricing without significantly affecting customer demand. A moderation in input costs or better pricing realisation could help the company recover its operating margins over the coming quarters.
The key question is whether IGL can convert its record sales volumes into sustainable earnings growth. Until profitability improves, the company’s strong demand figures may not be enough to offset concerns about its financial performance.
Frequently Asked Questions
1. What was IGL’s Q2 FY27 net profit?
IGL reported standalone net profit of ₹24.38 crore in Q2 FY27, down 93.5% from ₹372.51 crore in Q2 FY26.
2. Why did IGL’s profit decline so sharply?
Natural gas procurement costs increased 47.9% to ₹4,646.01 crore, substantially faster than the 26.3% growth in revenue from operations. This severely affected operating margins.
3. What was IGL’s Q2 FY27 revenue?
Standalone revenue from operations increased 26.3% year-on-year to ₹5,613.62 crore.
4. How much did IGL’s gas sales increase?
Average daily gas sales increased approximately 8% to 10.06 mmscmd, crossing the 10 mmscmd milestone for the first time.
5. What happened to IGL’s EBITDA?
IGL reported negative EBITDA of ₹31.11 crore in Q2 FY27, compared with positive EBITDA of ₹442.83 crore in the corresponding quarter last year.
6. What was IGL’s consolidated net profit?
Consolidated net profit declined 93.8% to ₹23.75 crore from ₹384.95 crore in Q2 FY26.
7. What is the difference between CNG and PNG?
CNG, or compressed natural gas, is primarily used as a vehicle fuel. PNG, or piped natural gas, is supplied through pipelines to households, commercial establishments and industrial customers.
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