Share price of city gas companies Indraprastha Gas Ltd (IGL) and Gujarat Gas moved northward on Wednesday following reports that the price of natural gas from domestic fields would drop by 18 per cent to $4.24/mBtu from October 1. Till now, the price is $5.18/mBtu.
IGL gained 3.70 per cent at Rs 478.05 while Gujarat Gas advanced 2.76 per cent at Rs 519.10.
IGL shares opened at Rs 461.90 and had touched a high and low of Rs 498.40 and Rs 461.90, in trade. Similarly, Gujarat Gas opened at Rs 510 and had touched a high and low of Rs 530 and Rs 505, in trade. Sensex closed 1.46 per cent up at 26,154.83.
The price would be valid for the next six months. The price of domestic natural gas is decided based on a formula approved by Narendra Modi-government in October last year, which is linked to global indices.
“Gas companies like IGL and Gujarat Gas would be beneficiary but its pass on model so if they do not pass full benefit than we could expect margin expansion in 3QFY16,” Emkay Global said in a note.