While electric vehicles (EV) continue to get headlines, their penetration – especially in the mass segment – is facing headwinds globally, inadvertently strengthening the view of CNG adoption and, by extension, CGD ecosystem.
Structurally, the CGD sector witnesses the new interest of investors due to constant volume growth, margin expansion potential and supporting regulatory structures. In FY 25, CNG. Powertrain increased ~ 35% yo, which establishes itself as the fastest growing fuel category in India’s passenger vehicle market.
Moreover, the CNG vehicle penetration has expanded significantly in the leading OEMS, with the model now a year ago compared to the lower double-digit, now the model is about 25% of the portfolio of some manufacturers.
This trend is reinforced in the sub-in-in 1 million category with the onset of CNG models that are afforded-a segment where EV penetration is limited.
Globally, EV is playing for the benefit of the CGD sector at a slow pace. US And in Europe, policy tapping has reduced EV sales growth, cutting up the displacement of the expected oils expected by EV by only cutting up to 5 MB/D by 2030, half of which is based on China alone.
Simultaneously, the increase in import tariffs in major markets against Chinese EVO is creating obstacles to global EV supply chains, delaying widespread adoption.
On the contrary, CNG runs through OEM configuration with a better unit economics, infrastructure rollout and demand for mass market.
The support of the government continues to be the main capable for the CGD. In the new geographical and industrial dysfunction zones, the CGD network is catalyst in the cities-2/3 cities-by expanding the CGD network.
The policy around the cleaner mobility options and price-aligned incentives puts a higher risk of the medium-term possibilities of the consistency segment.
In summary, when EV is ambitious to adopt, the CGD field is anchored in affordable, scalability and infrastructure readiness.
With limited competitive disturbances, strong policy support and increasing penetration in key auto segments, the CGD field is in a structurally good condition for continuous growth in the next–year.
Metropolitan Gas: Buy | Target Rs. 1760 | LTP RS 1370 | Side Ltd 28%
Mahagar gas is buying one by the visibility of strong fundamentals and strong growth. Despite the fiscal year 25 EBITDA/PT decline, management guides for volume CAGR 10% than 25-27, under the leadership of CNG demand, cooperation with OEM and guaranteed cost discounts for new PNG customers.
The company targets significant expansion – adding 250 CNG stations and upgrading the existing people by FY 30, with strong consumption in the Depot Access Case and Mohotsav 2.0 plans for commercial vehicles.
UEPL volumes guide to grow 40% yoy in FY 26, while batteries offer long -term earnings in Manufacturing, LNG and CBG. We expect 10% CAGR to volume at the fiscal year 25-27.
Gujarat Gas: Buy | Target Rs. 535 | LTP RS476 | Side Ltd 12%
Gujarat Gas is in a good position for growth with the expected EBITDA margin of INR 5.6–5.8/SCM for FY 26/27, supported by LNG and crude prices and costs less than crude prices.
The company targets 12% yo CNG volume growth and the police station is aggressively expanding to Rural, Ahmedabad Rural and Rajasthan to capture the Industrial Dysfunction. Strategic structural investments and efforts to accelerate industrial dysfunction gas adopts support strong volume growth.
These factors pursue positive margins and volume outlook, strengthening the strong state of Gujarat gas in the rising gas distribution market.
(Author Head – Research, Property Management, Motilal Oswal Financial Services Ltd.)
(Connection: The recommendations, suggestions, views and views of the experts are their own. This does not represent opinions of economic time)
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