The petroleum and natural gas regulator has offered 86 geographical areas covering 174 districts for bidding around the city distribution network in India. Through the current round of bidding, city gas distribution (CGD) volumes are expected to increase from 25 mmscmd to 50 mmscd in the next five years.
Further, while previously the PNGRB covered around 19 percent of the country’s population and 11 percent of the geographical area, the current round itself will cover 29 percent of the population and 24 percent of the geographical area.
Why is this important
Currently, the CGD network covers 91 geographical areas having a 25 mmscmd volume, however with a massive expansion plan the regulator has offered 86 new geographical areas covering 174 districts at an estimated investment of Rs. 70,000 crore.
This is likely to benefit the three major CGD players namely Gujarat Gas, IGL and Mahanagar Gas.
Stock to be impacted
Mahanagar Gas (CMP: Rs. 822, MCap: Rs. 8114 crs, 13.5x FY20E PE)
Gujarat Gas (CMP: Rs. 745, MCap: Rs. 10268 crs, 20.6x FY20E PE)
IGL (CMP: Rs. 264, MCap: Rs. 18511 crs, 19.6x FY20E PE)