The city gas distributor stocks are in focus. This is after the new scheme, effective September 1, will enable an additional 200 standard cubic metres (scm) of Administered Price Mechanism (APM) gas for CGDs. The brokerage house Nomura has picked Mahanagar Gas (MGL) as the biggest potential beneficiary of the new incentive with Indraprastha Gas (IGL) and Gujarat Energy, formerly Gujarat Gas, also likely to gain.

The brokerage’s preference for MGL comes down to how quickly it can add new paying households and how much gas each household consumes. On both counts, MGL appears to have an advantage.

The new policy could give CGDs access to additional lower-cost domestic gas as they expand their base of active customers. For MGL, Nomura believes this could translate into a meaningful reduction in gas costs.

According to Nomura report, the incentive could significantly improve the economics of PNG expansion. The brokerage estimates that the additional APM allocation could bring down the payback period for PNG-related capital expenditure from around 10 years to three years.

Nomura said, “Only the increase in incremental ‘billed/active’ customers will be considered.”

MGL enters the scheme with a particularly low base of recent household additions.

The company added only around 9,700 new households per month during April-June 2026, compared with its historical run-rate of around 28,000-30,000 households per month.

This gives MGL more room to increase additions and cross the threshold used to determine additional gas allocation.

Nomura said, “This implies that MGL has an advantage of a very low base and it can potentially get much higher APM allocation at the expense of other CGDs (given APM gas pool may not change).”

There is another reason the brokerage prefers MGL. Its gas consumption is around 108 scm per household annually, the lowest among the CGDs covered by Nomura.

With the government offering 200 scm of additional APM gas for every incremental paying household, MGL could potentially have a larger surplus after meeting household demand.

Nomura believes this implies “the highest excess APM allocation per new household added.”

IGL added around 28,800 households per month during April-June 2026, broadly in line with its historical pace.

While this keeps IGL well placed to benefit from the incentive, it does not have the same low-base advantage as MGL. Therefore, the incremental benefit could be less pronounced.

Gujarat Energy, formerly Gujarat Gas, also stands to benefit, but Nomura sees a relatively smaller advantage.

Its gas consumption is around 131 scm per household per year, the highest among the covered CGDs. This means less excess APM gas could remain after household consumption.

The company also has a gas trading business contributing around 36% of EBITDA, which could dilute the impact of any improvement in the CGD business.

Nomura noted, “Overall, we think that MGL may benefit the most given it benefits from a low customer addition base during April-June, which makes the threshold easiest for it to surpass with the highest potential incremental connections during the upcoming September-December cycle.”

The key metric to track after September 1 will be active and billed PNG customers, not just new connections.