Ladies and gentlemen, good day and welcome to the Indraprastha Gas Limited Q2 FY2026 earnings conference call hosted by DAM Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touch-tone phone. I now hand the conference over to Mr. Krishan Mundra from DAM Capital. Thank you, and over to you, sir.
Thank you, Huda. Good day, ladies and gentlemen. On behalf of DAM Capital, I welcome all of you to Indraprastha Gas Limited's second quarter FY26 earnings call. Today, from the management team of IGL, we have the pleasure of having with us Mr. K. K. Chatiwal, the Managing Director of IGL, Mr. Mohit Bhatia, the Director Commercial, Mr. Sanjay Kumar, the CFO, and Mr. Manjeet Gulati, the VP Finance. With this, I shall now hand over the floor to the management for their opening remarks, which shall then be followed by the question-and-answer session. Over to you, sir.
Good afternoon, ladies and gentlemen. I'm Kamal Kishore Chatiwal, Managing Director of IGL, and it's my pleasure to welcome all of you to the Q2 FY2026 earnings call. Thank you for taking the time to join us today. For those who are new to this forum, let me begin with a brief overview of our organization. Indraprastha Gas Limited, IGL, is one of India's leading CGD companies operating across 12 geographical areas in four states. Our mission continues to focus on providing safe, reliable, sustainable energy solutions to our customers. We have built a well-diversified portfolio of mature and emerging geographical areas that offers both stability and significant growth potential. On the infrastructure front, our network continues to expand steadily. Today, IGL operates a steel pipeline network of over 2,500 km and an MDPE network of approximately 29,000 km.
Through this robust infrastructure, we supply natural gas to more than 3.175 million households, nearly 5,300 industrial units, and around 7,200 commercial establishments. Additionally, we operate 955 CNG stations across four states. Turning now to the financial and operational performance for Q2 FY2026, I'll just give a broad overview. The details will be shared by our Director Commercial. The overall sales grew by around 3% year-on-year. The CNG segment registered a 3% growth, while PNG volumes grew by 6%. Although the sales to DTC and DIMS declined due to their ongoing transition from CNG to electric mobility, the underlying CNG demand remained strong. Excluding DTC, the CNG volumes grew around 10%, reflecting continued traction across private and commercial vehicle segments. A key growth driver for the quarter has been the continued increase in CNG vehicle adoption.
On a 12-month rolling basis, we witnessed an average monthly addition of around 19,000 CNG vehicles, a 21% increase over Q2 of last year. The central government's GST rationalization, reducing GST on CNG vehicles from 28% to 18%, has further improved CNG's competitiveness, not only relative to other fuels but also relative to EVs specifically. As a result, October alone saw 31,000 new CNG vehicle additions, supported by festive demand and GST benefits. With effect from 1 October, the reduction of VAT on domestic gas sourced from Gujarat from 15% to 2% has also lowered the input gas cost by approximately INR 1 per SCM, and this is expected to positively contribute to EBITDA margins in the upcoming months. In addition to that, the notification by PNGRB regarding Zone 1 classification for CNG transport and domestic PNG is also there.
The implementation of that is yet to start, so we are expecting that to be notified shortly. Once that is implemented, there will be benefits, and when the exact number comes, then we will be able to give the quantum of the benefit. That concludes my opening remarks, and I will now invite our Director Commercial, Mohit Bhatia, to share his comments.
Thank you, Managing Director Mr. K. K. Chatiwal, and good afternoon to everyone. I'm Mohit Bhatia, Director Commercial at IGL. I joined today's welcoming, along with the Managing Director, all our investors, fund managers, and analysts to today's session. Let me take you to the key financial and operational highlights of quarter two for the financial year 2026. Our total sales volume for the quarter stood at 857 million standard cubic meters as compared to 830 million standard cubic meters during the same period of last year, reflecting a 3% year-on-year growth. This translates to an average daily volume of 9.31 million standard cubic meters as compared to 9.03 during the same period for the last year.
While daily growth remains flat overall, however, the NCR, that is the National Capital Region, grew by 7%, whereas the other GIs, including the new GIs, have shown a healthy growth of 16% during the quarter two over the last quarter for the same last year. In terms of quarterly average CNG sales, I think IGL crossed 50 lakh kg per day, with volumes reaching almost 7 million SCMD , making a growth of 3%. If we exclude the DTC sales, CNG grew by around 10% year-on-year basis. With the DTC share declining in the coming quarters, we expect CNG growth to remain healthy. In the PNG segment, excluding the NG part, overall sales increased by 6%, reaching 1.84 million standard cubic meters per day, compared to 1.74 million standard cubic meters in the Q2 last year.
The total revenue for this quarter stood at INR 4,432 crore, with a growth of 9% year-on-year. Our profitability EBITDA for the quarter stood at INR 443 crore, compared to INR 512 crore in the previous quarter and INR 532 crore in Q2 last year. The decline is primarily due to the reason in the average gas procurement cost. Consequently, the PAT for the quarter stood at INR 373 crore versus INR 431 crore during Q2 of last year. As highlighted by our Managing Director, EBITDA margins are expected to improve going forward, driven by the growth in the volumes, reduction in Gujarat VAT on domestic gas procurement effective October 25. Further, as he mentioned, the upcoming single zone tariff framework announced by PNGRB, which aims to rationalize tariffs and bring CNG and domestic PNG under a unified structure, will also have a positive impact on the margin.
Once implemented, this framework is expected to significantly benefit the entire CGD sector, particularly companies like IGL, operating far from the gas sources, and should positively influence IGL margin in the near future. That concludes my remarks, and we are now opening the floor for the Q&A session. Thank you.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of [Provell Singh] from ICICI Securities. Please go ahead.
Thank you for the opportunity. I hope I'm audible.
Yes, yes, you are audible.
Sir, just first question was on the daily number, which you mentioned was flat on a YoY basis for this quarter. Is it possible to get a comparable number for Q1? What was the daily volume growth like in Q1 of this year?
Daily volume in the Q1 was also, I think, 1%, 1.5% positive if we include the DTC numbers. If we exclude the DTC numbers, it was around 7%-8%. With the diminishing in the DTC, because the DTC average sales in the month of September, it was hardly left around 30,000 per month only. That is why this is the trend. In coming years, we look forward for a healthy growth in terms of CNG because the historical sales of DTC will be absolutely almost zero.
Sir, given this kind of run rate, is it then possible to look at what would you like to still maintain the 6%-7% overall volume growth guidance for FY2026? I believe that was shared earlier.
Yeah, we look forward for the same around maybe 8%-10%. If we exclude the DTC volumes, the historical volumes as well as the current, and then we overall see. I think it is in the range of 6%-7%, and with the newer GIs performing well closer to a double-digit growth, we expect to have in the range of maybe 8%-10%.
Understood. The second question was, I think the obvious question we had about the Saudi JV. Just wanted to understand the strategic rationale for looking at the Middle East suddenly as an option. If you can also throw some color on what kind of investment, if any, has been thought of, and how will the financing, the modalities of this whole move that you have put?
Actually, that, we feel, is a very, very big opportunity because we have sent a team there to assess their existing industrial cities. Just to give a brief, Saudi has divided the whole kingdom in 36 industrial cities. Out of that, they have awarded seven industrial cities. Presently, they are on liquid fuels. Okay, liquid fuels, LPG, propane, and all those things, even the heavier fuels also. They want to transition to gas. After these seven, now the next in the line is five, and there the development is a little planned in the sense that they open up those industrial cities where the trunk lines are available. Okay, very near to these industrial cities, gas is available. That gas trunk line is operated by Aramco. Each industrial city has a potential of 1 million-1.5 million of gas.
The laying cost for the network is also not much since the gas is nearby. We feel each zone should have roughly, I mean, the investment would be realistic, like in India. If we look at India, some of the areas, the pipeline is far away, and the gas is not available. Individual entities have to lay 80 km, 90 km of pipeline to bring the gas. That is not the case there. The amount of investment to that extent would be less, but the volume potential is huge in each industrial city. IGL will provide the technical, operational, safety assistance or assist in developing both aspects. The financial and overall stakeholder management at Saudi would be with our partners. The interest rate, as you know, is extremely low. To that extent, we feel this is a good opportunity.
Since this is a first venture, so many more opportunities may come in the gas value chain.
Our return paper will be in the form of basically a consulting fee in terms of the assistance that we provide?
We are investing. I mean, the company, we will be having the stake around 40% equity. Okay, the partner would have 60%. That's the kind. It's not a consulting assignment. It is pure investment also. That will be a JV, joint venture in the form of a JV, where 40% stake will be IGL's. We are putting money, we will put in expertise also. We will send people there who will implement all those on ground.
Sir, if I may ask one follow-up, what is the regulatory and sort of the margin environment for these licenses? Is it similar to India, different?
It will meet our threshold. I would only say that it is above our threshold, whatever we have within the company. It is meeting those requirements. We are not looking at all these five cities. Our next target would be to target those 36 industrial. This is in the phase one. Okay, next, we want to expand there. Twenty-four cities will again come up for bidding, where also the tendering is there and two-stage tendering is there. The first step, the pre-qualification is there based on some predefined criteria. You have to score minimum 60%. According to us, I think we will be able to get more than 90% there.
Any numbers you can share? Sorry, sir.
Right now, actually, the tender, we don't have the tender document as such. That will be available once we are qualified, and the results will be announced on January 9. The last date of bid is 29th of November. We'll be submitting our bid for pre-qualification. After, there are some procedural requirements there where you need to have a NISA license and all those things. We are in the process of doing all those. We are taking help of international consultants based in Saudi, Grant Thornton. That's our consultant for the assignment. Whatever prerequisites are there for submitting that bid, we are in the process of doing that. Once that is done, maybe after January, we will know based on the tender document what are the pricing and all those things.
Understood. One last question. This was more around this quarter's margin reduction and the gas cost increase. Just wanted to understand what was the reduction in newer gas and APM allocation for this quarter, and any spot LNG procurement, if at all, was done in this quarter because of which costs have gone up?
Actually, there is no spot procurement in our portfolio, all our term contracts. The only thing is that handicap has increased. Dollar appreciation is there. We have depreciated. These are the major impacts in addition to the reduction in this APM and new well gas.
How much was the reduction, sir?
Yeah, Sunday we'll be sharing that. If you talk about APM gas, last quarter, it was out of the priority segment. 44% was the allocation for priority segment. This quarter, it is 41%. In terms of NWG, last quarter, it was 13%. It has come down to 10%. HPHT, also we had some major contracts or major supplies through HPHT last quarter. It was 16%. This quarter, it was 10%. Our LNG component has increased from 25% to 37%. That is the mix change which has happened in the current quarter, which basically increased the gas cost.
Understood, sir. Thank you so much for the detailed answers. I'll come back in the Q&A. All the best.
Thank you.
Thank you. The next question is from the line of Maulik Patel from Equirus Securities. Please go ahead.
Thanks for the opportunity. You mentioned that ex-DTC, in this quarter, the volume growth was 10% for Delhi?
Yeah. No, for Delhi, it was 7%. Overall, 10%, excluding DTC sales. Overall, we grew by 10% in CNG. And if we talk about only Delhi, the growth was 7%.
Got it. Sir, this quarter, it seems NCR growth has been on a lower tide, right? Generally, you grow around 10%, 12% growth rate on NCR. This quarter, the NCR growth, as you mentioned, was around 7%, 8% only.
Yeah, it was 7%-8%. Correct.
Any specific reason, or this is a new normal, or you expect that growth to bounce back?
I think it should bounce back. Maybe there has been a little bit dip in the industrial segment, we can say, if we buy for good. There has been a certain dip in that. We are hopeful to recover it back. Actually, if I may just add to that, the LPG prices have been a little soft. As you know, the crude is around $60, $65 range. That competitiveness is there, and there is minor switch from gas to propane. Those who have got this flexibility.
Sir, I think so when we say about 7% growth in NCR, and the argument what you have given me is more on the industrial side, where the growth was on the weaker side, right? CNG growth has been good, as per you, right? CNG in NCR would have grown by what percentage, sir?
NCR, CNG has grown by 9%. PNG is 5%.
CNG grew by 9% and the PNG grew by 5%. Got it. Sir, one last question. On this Gujarat government VAT reduction, which you have got now, is there any possibility that government of Gujarat can go to the court? Because there is no such notification from the central or the Gujarat government. I think it's in an agreement, revision of agreement between GAIL, ONGC, and you, right? Is there any possibility the government?
No, no, no. Understanding is not correct. There's nothing related to Gujarat government. Okay? They have not issued anything that we are reducing that. The VAT remains 15%. It is only because it is high seas offshore sale that has happened. And the arrangement is between GAIL and ONGC, and they are delivering us the gas at Delhi. So nothing that the VAT rates have been reduced. Now we are looking at CST.
Sir, from a, I think, one quarter back or 10 years back, the same thing was working, right? GAIL, ONGC was delivering gas to GAIL, and GAIL was delivering that gas to IGL or whatever. The Gujarat government, this 15% VAT, it probably came in 2017 or 2018. I do not know which year. Why now? Why was it not happened in the past, sir?
I think there has been some intervention from the Ministry of Petroleum and Natural Gas and central government. Some things have been worked out for the CGD sector. There were some representations that this is an additional thing that is there that is not required. I think something has been done, but the details will be available with, I think, GAIL and ONGC, what is the arrangement. We are not privy to that.
Got it, sir. Sir, and one more. On this additional addition of tariff to the single zone for the CNG, what kind of a cost saving you will have at a company level? Will it be closer to around INR 1 per SCM?
I think it should be. I mean, the numbers are important there. But the numbers go up, they are floating around. It should be more than one.
More than one, sir. Got it, sir. Thank you and wish you all the best.
Thank you.
Thank you. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question, sir. Sir, as you mentioned, the cost of gas savings of INR 1 per SCM due to VAT reduction to 2% from earlier 15%. Are we planning to pass on these benefits to the CNG and the DPNG consumers? We have cut the CNG prices in a non-Delhi region in October month.
Yes, yes. Wherever, actually, Delhi, we wanted to keep the prices constant. Earlier, we have not increased in anticipation of all these changes. That was the reason that Delhi has been kept constant. We have passed on INR 1 benefit to the PNG customers. Outside the NCR, some new GAs which are growing, there we thought that it would be good support that whatever benefit is there, we pass on that. It will help us in expanding the base.
Is there still a scope to pass on more?
We will see. We will see that once the tariff notification also comes. We will review the prices and then take a call. As of now, our prices are very competitive with respect to the neighboring GAs and also with respect to alternate fuels.
The second question, if you could provide gas sourcing details for this quarter, how much was the APM, NWG, crude link, Henry Hub ? That is mostly into the MMSCMD term, that would be helpful. I know that you have a little bit shared in the percentage term, but if in MMSCMD, it would be helpful.
Okay. So the gas sourcing which happened in Q2 was the APM, non-APM gas, domestic gas was 3.25 million cubic meter per day. This was 41% of the priority segment. NWG was 0.81 million. Coalbed methane gas was 0.11 million. HPHT domestic gas was 0.76 million. RLNG was 2.91 million. This comprised of 7.83 million cubic meter of priority segment sales.
Okay. Sir, last question from my side. If we try to back calculate the difference between the DTC versus CNG loss, in the last quarter, in Q1, you mentioned the 88,000 kind of 88,000 SCMD kind of consumptions on a daily basis, while in September ending, you just mentioned 30,000 SCMD. If we add back the difference of 0.06 MMSCMD into the CNG volume, then the total CNG volume will reach approximately 7.03 MMSCMD from which we reported 6.97 MMSCMD. And still, if we try to back calculate the YoY growth, it's hardly 6%, while you are indicating 7% and 10%. Can you please correct me where I'm losing?
If you see, we need to compare it with the historical. Just some data I'll share with you. Last year, September, we were averaging out around 200,000 per day, which has come down to almost 30,000 per day. In Q1, if we see in the June month, I said you also mentioned that around 80,000 per day, whereas last year, same June was around INR 215,000 roughly. I think the historical figures need to be looked into while calculating the growth. I think I am able to respond to you.
Yeah, yeah. Lastly, how many DTC buses are remain to be phased out in this year?
Yeah, almost now it has come down drastically. Now only hardly 28,000-30,000 per day sales are there. Further, we expect we have the DTC buses remain in operation is 226, and DIMS, it is remaining at 1,750. Overall, both put together, 2,000 buses are there. Last quarter, this number was 3,200.
Thank you, sir, and wish you all the best.
Thank you.
Thank you. The next question is from the line of Varathar ajan from Antique Limited. Please go ahead.
Thanks for the opportunity, sir. We're looking at the trade margin of ONGC. Has there been any significant change during the quarter?
No, there is no change in trade margin during the quarter for the ONGC.
Does the contract have any kind of an escalation built into it?
Yes, there is for outside Delhi GAs, there is a provision of 5% increase in the trade margin.
Paranam?
Outside Delhi. Delhi is, I mean, there is no agreement as such in Delhi. Outside Delhi, you can say the 25% volume, there is an agreement. I think the agreement is with ACE that you may be aware. You may be referring to that. The 5% increase is there.
Secondly, the OpEx for the quarter seems to be on the lower side. Is there something sustainable? What led to that kind of a lower OpEx?
Actually, mainly the savings have been in the repair and maintenance and power and fuel. I mean, power and fuel is marginal in the sense that some of the gas equipment we have shifted to power. That has been some. The major improvement has been in the repair and maintenance. Some operational efficiency is there.
Should we assume this is more like a new normal?
Yes, this is a new normal. Rather, we are focusing on improving it further. Rupees per SCM or per annum , we are constantly improving. The partial benefits have been realized. We feel that we can improve further.
Great, sir. All the best. Thanks a lot.
Thank you. The next question is from the line of Amit from Axis Capital. Please go ahead.
Hi, good afternoon. On margin, while this quarter, you have seen a lower margin, but at the same time, as you mentioned, the INR 1+ kind of benefit should come in. How do we think about EBITDA margin in that context? In the past, I think you maintained INR 7+ as margin guidance. Could you throw some more light on the margin expectations?
We are confident that INR 7-INR 8, the guidance, we will be able to maintain. Unfortunately, the tariff order was notified in, I think, 4th of June or 4th of July, I think. 4th July, but it is yet to be implemented. In anticipation of that, we have not touched our retail selling price for CNG. That was, I think, if that order comes, then we'll be able to, I think, assess the situation. Our long-term guidance remains on INR 7-INR 8, and we are on path to that.
Sure. Assuming the tariff order comes through and this INR 1+ cost savings is there in Gujarat, essentially, then we should not be requiring any price hikes to kind of go to INR 7 then, right? Is that understanding correct?
Yes. More or less, that understanding is correct, but we may have to do some review on that front for some of the GAs where the taxes are high. That is a constant review process. We will review that situation. On a broader base, yes, what your understanding is correct that if we get INR 1+ kind of a benefit in tariff and INR 1 from this VAT reduction, then I think we are in INR 7-INR 8 range.
Got it. Perfect. On CapEx, what is the guidance now?
Yeah. On the CapEx, during H1, we have done CapEx of INR 580 crore. And primarily on our core segment, that is the infrastructure, PNG in particular, around 50%, 55%. The CNG and the steel part are around 40%, 45%. We have plans for around INR 1,200 crore-INR 1,400 crore in the CapEx. Some diversification thing, if it happens, we are trying. Another maybe INR 700 crore-INR 800 crore.
Should we see more as a rounded CapEx, the INR 1,200 crore-INR 1,400 crore for core business?
It will be roughly around INR 1,200 crore-INR 1,400 crore. Almost INR 580 crore-INR 600 crore we have done in H1 already.
Okay. Okay. Sure. Yeah. That's all from me. Thank you.
Thank you. The next question is from the line of Nitin Tiwari from Philip Capital. Please go ahead.
Hi. Good afternoon. Thanks for the opportunity. Sir, staying actually on the question of growth. First, I just wanted to point out and correct me if I'm wrong. If I look at the rolling growth over the past four quarters for each subsequent quarter, I mean, we are looking at a slowdown in growth from third quarter FY2025 onwards, which is third quarter last year. This is across segments, not only in CNG. How does our growth target of about 10% in a year stand in this backdrop? Because so far in this year also, in the first half, we have done about 4% growth. Are we sticking to our guidance of growing at about 9%-10% in the year?
Definitely, as mentioned earlier also, if we exclude the DTC, we need to have this fact that DTC will be diminishing and there is a transition on the DTC to the EV part. If we exclude that, I think CFO also mentioned that we are growing at 10% in CNG and around 8%-10% in PNG also. We look forward on those numbers only. 8%-10% should happen. Once we get the zero base of the DTC, I think we'll be achieving these numbers.
Staying even on the DTC question, I mean, I'm working with the numbers that you gave of about 0.2 MMSCMD in September last year and about 0.03 in this year. Even if we adjust for that, the CNG volume has grown by about just 5% on a year-on-year basis, 5.5% . I mean, I'm not sure what am I missing that I'm not getting the 9% number over there for your CNG growth. Secondly, I mean.
This is.
Yeah, please.
Okay. This is only the 5%-6% you are seeing on the DTC gap. Otherwise, there is a natural growth also. If we compare in holistic, the outside GAs as well as NCR part, it is coming at around 9%-10%.
Sorry, I didn't get that.
Apart from DTC, DIMS sales have also gone down. I told you about the bus fleet which has gone down, not only for DTC, but DIMS also. There also, the number of buses which have gone out of service on CNG is approximately 1,000. If you compare both sales put together, there is a reduction of approximately 2.2 lakh kg. These numbers, we are talking in kg.
Okay. Okay. Got it. So the 0.2 number that you gave and . I mean, that was 30,000 SCM per day or 30,000 kgs per day that you are selling?
Kilogram per day. 2.2 lakh kg reduction in sales on account of DTC and DIMS. You have to multiply it by 1.2 to arrive at SCM number.
Understood. That's a mistake on my part. Thanks for correcting me, sir. Secondly, on the margin question, sir, while we have a benefit of about INR 1 because of the tax change that has happened, I just wanted to understand the impact of INR. How should we look at that and how does that impact our cost assets? Would the sharp depreciation in INR be offsetting that benefit that we are getting from tax additionalization?
I didn't get your question well. This is one. I think this INR 1 that we have calculated is factoring in that impact of the current whatever INR depreciation has happened. Further depreciation, I think then we will have to reach.
Okay. What I'm trying to understand.
It will probably be there. You're right that impact of depreciation would definitely be there, but we are expecting that rupee to be stable given strong growth and all. Impact will definitely be there, but INR 1, it has been factored.
Right. I mean, what I'm trying to get at, sir, is that your guidance for INR 7-INR 8 of operating margin, right? And if we look at the first half, we have done about INR 5.7, which is 5.5 . I mean, the incremental INR 1, which is going to come in from 1st October, you're saying that this is in excess of anything that would have been taken away by depreciation in INR?
Yes. We have, outside of Delhi only, we have reviewed the prices. Delhi CNG has remained untouched. Plus, if we get the notification with respect to the tariff order, that will be additional INR 1 plus. That will take it, without any change in the prices, that will take it to 7-8 zone.
Understood.
If you're talking about full year average, then it would be difficult. But on quarter basis, probably we'll be reaching by maybe quarter four, we'll be reaching 7.
Sir, to conclude, how should we look at the volume number for FY 2026? I mean, the average in the first half has been about 9.2. How should we look at the full year then in your assessment?
I think our exit would be around 10.
Okay. For 2027, sir, any?
Exit would be around 10 million.
Okay. Exit would be 10. And for 2027, if you can give us some guidance in specific terms.
I think if we are able to consolidate some of the GAs and all that we are discussing, then I think we can do more than 1 million addition.
Understood, sir. Thanks, sir. That's all from my end. Thank you.
Thank you. The next question is from the line of Nilesh from HDFC Securities. Please go ahead.
Yeah. Hi, sir. Just one question on MNGL. Is it possible for you to share financial and operational performance of MNGL for this quarter as well as for H1?
Yes, I'll give you. MNGL is selling around 1.9 million cubic meters of gas per day. Its profit for the half-year was just INR 415 million.
INR 415 million?
INR 415 million. Q2 profit for MNGL was INR 1.48 million.
Sir, similar number for H1?
It should be similar. So approximately INR 300 crore for half-year.
Correct.
With that number, profit after tax.
Okay. Thank you. That's all from me. Thank you.
Thank you. The next question is from the line of Sabri from Emkay Global. Please go ahead.
Yeah. So just a clarification. You mentioned those Saudi cities. What is the volume potential per city?
Actually, as per the initial estimate, it is 1 million-1.5 million. Exact details would be known once the tender document on stage two. They will be sharing the details in stage two. Once we pre-qualify, they will be sharing the details. Our assessment, our team, we had sent a team there. Existing industrial cities are doing around 1 million-1.5 million. There are seven industrial cities. Those are operational. In the present one, three cities are. That is the major industrial city there. Our estimate is that all industrial zones should be in that range.
One and 1.5 million metric standard cubic meter per day, right?
Yeah. In one industrial city.
Yeah. MMSCMD, right? And also, what is the, I mean, what is the rough cut investments required to achieve that kind of a volume?
I think those numbers are not there, but it will be much less than what is there in India because the connectivity is very nearby.
Is there a ramp-up there or it could be done very quickly given that it is industrial?
I think it could be done very quickly because that's the mandate that they are given to switch from liquid to gas. There, I think it would be very, very quick. Only the phasing in the cities, I mean, they have planned it very well in the sense that wherever they are able to give the trunk pipeline connectivity, those industrial cities, they are opening up for bidding. Right? Now in this phase, there will be five. Maybe going forward after one, one and a half years, when the pipeline connectivity in other zones is there, they will open up that. The timeline for this is very, very short in the sense that I think their tender finalization would be somewhere around May, June. By 2027 end, the gasing should be there. That's the kind of timeline they have planned.
Got it. Secondly, on the currency, you mentioned that when you have talked about this margins going up, you have built INR 88-INR 89 rupee dollar, right, versus INR 87 in Q2?
Assumption is around INR 88.
Around INR 88 you have taken while giving this guidance and the pricing, right?
Yes.
Okay. Okay. Thank you so much. Yeah. Thanks.
Thank you. The next question is from the line of S. Ramesh, an individual investor. Please go ahead.
Thank you and good evening. If you're looking at your fourth quarter EBITDA guidance of around INR 7, if you were to be asked how you may be able to achieve INR 8 per SCM over FY 2028, would it come from operating leverage on, say, 11 MMSCMD by 2027? Is there any other benefit you are factoring in by way of your plan earlier to convert some of the Tata booster stations to online? If you can give us some thoughts on that, how you would possibly expect to achieve that ramp-up from INR 7 to INR 8 over the next one or two years?
Actually, I'm happy to share that idea. The major advantage is that our online sales is almost 97.5%. Okay. 97.5% of our sale comes through online stations. That's very limited stations which are offline, and those are mainly in outside GAs. That's point number one. Second is that some of the benefit that we are anticipating is on the LNG front. Going forward, there is an expectation that once the LNG plants are commissioned and they go on stream, the LNG prices which are currently at around $10-$11 should also come down. That would be another advantage. The crude being down, we feel that APM and natural gas prices would also be subdued as well as the HPHT prices. Given that energy prices overall are lower, we feel that the input gas cost should come down.
Once that comes down, I think we will be comfortably in the INR 7-INR 8 zone. These are the two, three factors on the input front. On the operational front, we continue to improve our operational efficiency, but that will give only an incremental benefit like 20-25 paisa per SCM kind of numbers. The big numbers would come from the input gas cost as well as the volume that you talked about.
Yeah. Understood. If you look at the Saudi project proposal, if you're looking at technical and operating assistance and your own equity stake, what are the kind of risks you are taking in terms of developing the project? What will be your revenue stream from that? What are the kind of ROC you can expect based on whatever internal assessment you have made? I know it is possibly already done, but to get a sense in terms of what is the motivation to take up, what is it that you are going to do there in terms of earning revenue, and how would it support an ROC in terms of your own target?
Actually, our bigger vision is to create an IGL kind of entity. That's the bigger vision. For these five cities, I mean, we are looking at INR 100 crore, INR 150 crore for five cities, and the volume should be 4 million-5 million.
Thank you. The next question is from the line of Akash Mehta from Canara HSBC Life. Please go ahead.
Yeah. Just continuing on the Saudi, in the existing seven cities, who are the players like, and how is the competition like? Who are you competing with, and what are the chances of winning these additional five cities that you are looking at?
Actually, that's what I said, that the numbers we are sharing are based on the existing industrial cities. Those are operating, and they are doing 1 million, 1.5 million kind of numbers. They are the local CGD entities. The size is much smaller than IGL. That's the only plus that we have, that we have a history of 25+ years operating in the sector, and we are operating in the most difficult area of NCR region. That too from the PNG perspective, I'm saying. These are the two factors plus our financial, technical strength, operational experience, safety experience. All those factors make us believe that I think we should be able to win those bids. Subsequently, the volume should be there. This is the first step. I'm seeing that more and more industrial cities would be coming up.
Based on our performance, we are confident that we'll be able to get some more cities also.
Just to follow up, just to clarify, I mean, per city, I mean, once you bid for the city, you set up the entire infrastructure. You will be the sole supplier of gas over there. Is there any timeline in terms of how many years and what this exclusivity would be there?
I think those details are not available with us because once the tender document is there, then we'll be able to know. But preliminary, I think they also have some exclusivity kind of a period, the infrastructure exclusivity, similar to other countries and also similar to India. They will have some exclusivity period. In addition to that, I think the best part is that their trunk pipeline connectivity is near to these industrial cities. The connectivity to the main city would not require much CapEx. That is the positive. Once you bring in the steel network, then the MDPE network, MDPE network, you can connect the individual industries. Our team has gone and similar equipment, same vendors are there. Those who are supplying the metering skid there, the same metering skids are available in the existing whatever industrial cities are operating.
The details are not with us right now. That will be part of the tender document. So there is still no information available with us.
Sure, sure. That's it from my side. Thanks.
Thank you. We will take that as our last question for today. I now hand the conference over to Mr. Sanjay for closing comments.
Okay. Thank you, everybody, for attending this call. We had a very fruitful discussion and lots of queries on our international venture, which we just started yesterday. Probably that will be a major milestone in the history of the company. Going forward, probably it will help us improve our profitability and volume. Probably when we meet again for the next meeting, we will have more things to share on that aspect. With that, thank you very much. Thank you again for joining this call. Thank you, DAM Capital also. I missed to mention that. Thank you.
On behalf of DAM Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.