Shares of city gas distributors have fallen up to 5% following the Delhi government's approval of the electric vehicle (EV) policy for cab aggregators and delivery service providers.

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The Delhi government is mandating 100% of all cab aggregators and delivery service providers to switch to EVs by the calendar year 2030.

The policy entails 5% EVs in fleet of the likes of Uber and Ola in six months, 50% in three years and the rest 100% in five years.

Overall, this policy will entail faster adoption of EVs in Delhi and affect the CNG market and IGL. IGL’s taxi share in CNG volumes, 75% share of overall, could be 15%.

Assuming an EBITDA/scm of Rs 7.4/scm, this implies Rs 270 crore of impact, ICICI Securities said. FY25E EBITDA estimates for IGL are at Rs 2,500 crore.

Prima facie this is a material negative for IGL, the brokerage said. "We submit that implementation of the said policy will come with major challenges on the ground."

IGLs CNG volume for FY23 and Q1FY24 stood at 6.1 and 6.2 mmscmd, respectively, out of which 30% volumes are from taxi aggregators and service providers.

Of this, 50% comes via taxis and aggregators registered outside Delhi.

1mmscmd of CNG volume would be impacted going forward as conversion happens over the period, the brokerage noted.

At 2:08 pm, shares of Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL), Adani Total Gas and Gujarat Gas were trading 1-5% lower.

(Edited by : Amrita)

First Published:Oct 19, 2023 2:36 PM IST