Mon Nov 18 05:13:06 UTC 2024: ## City Gas Stocks Plummet After Second Consecutive APM Cut

**Mumbai, India –** Shares of leading city gas distribution companies experienced a sharp decline on Monday following a second consecutive month of reduced Administered Price Mechanism (APM) gas allocation. The cut has triggered widespread downgrades from analysts and brokerages, sending shockwaves through the market.

Indraprastha Gas (IGL) suffered the most significant drop, plunging 18.73% to ₹329.80 per share. Mahanagar Gas (MGL) followed closely behind, falling 13.35% to ₹1,137.40. Gujarat Gas (GGL) also saw a considerable decrease, closing down 6.44% at ₹454.70. Adani Total Gas (ATGL) and ONGC also experienced declines, falling 3.28% and 1.08% respectively. GAIL shares dipped by 1.21%.

Analysts at Nuvama Institutional Equities stated that the repeated APM reductions represent a significant blow to the sector, predicting further cuts in the future. They estimate that the latest de-allocation will impact 9-11% of overall volumes, necessitating the replacement of cheaper APM gas with more expensive alternatives like LNG and HPHT gas.

This negative outlook has prompted several brokerages to downgrade city gas stocks. Jefferies downgraded both MGL and IGL to “underperform,” while JP Morgan revised its rating for MGL to “neutral” from “overweight” and downgraded IGL to “underweight.” Nuvama also downgraded IGL and MGL, citing lowered margin and volume forecasts. While Gujarat Gas received a less severe “hold” rating from Nuvama, it was still affected by the overall market sentiment.

The sharp decline in share prices reflects the market’s concern over the impact of reduced APM gas allocations on the profitability and future growth prospects of these city gas distribution companies.

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