Why Gas Distribution Companies Are on a Tear Since November 15?

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Why Gas Distribution Companies Are on a Tear Since November 15?
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- The Petroleum and Natural Gas Regulatory Board (PNGRB) on Thursday, November 26, released a unified tariff structure for gas pipelines in an effort to make natural gas more affordable for Indians. The structure is broken down into two parts: Distances less than 300 km from the source of the gas (for example coastal regions) and for distances more than 300 km. Different tariffs have been established for both zones.

This will open up new markets leading to higher consumption of gas which is good news for gas distribution companies. Stock prices for these companies have been going up since the middle of November in expectation of this notification.

Mahanagar Gas Ltd (NS: MGAS ) stock has gone up from Rs. 860 on November 13 to Rs. 1,060 today, an increase of over 23%. Gujarat Gas Ltd (NS: GGAS ) has run up over 12% and is trading at Rs. 342. Indraprastha Gas Ltd (NS: IGAS ) is up 12% from November 13 and is trading at Rs. 486. However, the biggest gainer in all this is Adani (NS: APSE ) Gas Ltd (NS: ADAG ) that has zoomed up over 48% from November 13 when it was trading at Rs. 243. It is trading at Rs. 360 today.

This new structure might result in gas companies setting up new pipelines that will get their gas to the end-user.

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