Indraprastha Gas's stock nosedives as Kejriwal eyes EV shift for Delhi

The stock has taken a tumble on fears that the Delhi government’s EV policy could lead to a sharp decline in demand for compressed natural gas or CNG from cabs in the country’s capital. 
Indraprastha Gas station
Indraprastha Gas station
Updated on
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Major CNG player Indraprastha Gas's stock has corrected by over 15% in the last two days after the Delhi government approved the electric vehicle policy for cab aggregators and delivery services- the biggest consmers of CNG. 

The stock has taken a tumble on fears that the Delhi government’s EV policy could lead to a sharp decline in demand for compressed natural gas or CNG. 

Delhi cab aggregators constitute about 30% of Indraprastha Gas’s (IGL) CNG volume, with Uber, Ola, and e-commerce delivery services being the largest contributors. 

Delhi EV Policy

The new EV policy of the Kejriwal government is targeted at converting large-scaled cab aggregators, including bike taxis, cabs, and food delivery bikes, to EV technology. This is expected to reduce Delhi's high levels of air pollution by reducing vehicular emissions. 

The Delhi Electric Vehicle Policy aims to achieve the feat in a gradual manner and has fixed 2030 as its target year to achieve 100% conversion to electric vehicles. 

"We believe volume impact is eminent on Indraprastha Gas (IGL) over the transition," said Centrum Broking in a report on the new policy. 

The policy mainly targets cab aggregators as they commute nearly 200 kms a day on an average which is 5-6 times more compared to private vehicles. 

With the Delhi government’s EV shift, Uber has already ordered 25,000 EVs from Tata Motors in early 2023. 

Investors seem to be also worried about further developments along similar lines.

For example, approximately 15 percent of IGL's volumes come from DTC buses and three-wheelers, and the Delhi government has placed an order for 5,500 EV buses. Around 800 out of the total 3,700 buses operated by the Delhi Transport Corporation (DTC) already run on EV technology.

The Delhi government is also pushing for more EV auto-rickshaws. 

“Broader EV Policy suggests that 25% of all vehicles would be battery operated by 2024 (including private vehicles) i.e. one out of every four new vehicles sold in Delhi would have to be electric,” noted analysts from Centrum. 

 However, the policy exempts  individuals running a cab service

EVs accounted for only 2% of Delhi’s vehicular population in 2020, which has expanded exponentially to 10% currently. 

Apart from  Indraprastha Gas, Mahanagar Gas (MGL) which is operating in Mumbai and adjoining areas too reacted negatively in anticipation of a similar policy for Mumbai. 

The Delhi EV Policy, which was initially launched in August 2020, expired on August 7, 2023. This led to a brief period where the registration of all categories of electric vehicles in the Capital was temporarily halted for two days, prompting the government to extend the policy’s provisions until further notice.
 

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