INDUSTRY OVERVIEW – CITY GAS DISTRIBUTION

● The Global City Gas Distribution market was valued at US$ 178.35bn in 2022 and is anticipated to

project robust growth in the forecast period with a CAGR of 3.75% through 2028.

● Natural gas is one of the cleanest fossil fuel available in India, and currently accounts for around 6.7%

India’s primary energy mix. The government plans to develop a gas-based economy in the country and
is targeting to raise the share of natural gas in the energy mix to 15% by 2030. The demand growth is
essentially expected from the transport, residential and energy sectors.

● The Indian CGD sector is the second biggest consumer

of gas. Today, around 56.10% of India’s gas

consumption is met from domestic production, while the
remainder is met through imports.

● Indian CGD Market is expected to expand at a CAGR

of 11.4% during the forecast period between 2022 and

2028.

● CGD networks expanded tenfold from 66 districts in 2014 to 630 districts in 2023, resulting in a

significant increase in domestic PNG connections from 2.5mn to 10.3mn during 2023.

● Bidding Rounds:

o 11 CGD bidding rounds have been completed, and 215 districts in 19 states and one union
territory now had access to natural gas. CGD networks are being expanded and after the 11 th
round of CGD, 98% of Indian population and 88% of the geographical areas are covered.
o 8 firms have Key Parameters May-14 Aug-23 % Growth
submitted bids No. of CGD networks for Geographical
Areas 53 300 466%
for 12th CGD
PNG Connections 2.5mn 11.6mn 357%
bidding round
No. of CNG Stations 738 6,000 713%
offering 7
CGD Coverage (Population wise %) 13.27 98 639%
Geographical
CGD Coverage (Area wise %) 5.58 88 1477%
Areas
covering five North East states viz. Arunachal Pradesh, Meghalaya, Manipur, Nagaland & Sikkim and UTs of
Jammu & Kashmir and Ladakh.
After completion of 12th CGD bidding round, almost entire part of the country, except Mizoram, Andaman and
Nicobar Islands and Lakshadweep will be covered under the City Gas Distribution network
This amounts to a giant leap by the PNGRB towards improving the share of natural gas in the country’s
energy mix. India’s current share of Gas in the Energy mix stands at 5.78 %, which is slated to
increase to 15% by 2030 thereby creating a Gas based economy.

● Some of the initiatives taken by the Government of India in the Gas space include:

o Expanding the National Gas Grid to about 36,000 Km from current 23,000 Km.
 o The Petroleum and Natural Gas Regulatory Board (PNGRB) has authorised a 35,379 km Natural
Gas Pipeline Network across the country in order to create a national gas grid and increase
natural gas availability.
o The government has plans to build around 5,000 Compressed Biogas Plants (CBG) under the
Sustainable Alternative Towards Affordable Transportation (SATAT) program.

Players in City Gas Distribution

Selection
Revenue
EV/ EV/ Selection Selection
Company Name P/E (FY23)
EBITDA EV/ Sales EV/ Sales P/E
In INR Cr
EBITDA
Indraprastha Gas
Ltd 10.9x 1 2.0x 1 17.8x 1 15603
GAIL Gas Ltd 9.3x 1 1.0x 1 14.0x 1 145875
Mahanagar Gas Ltd 7.2x 1 2.3x 1 11.3x 1 6921
Gujarat Gas Ltd 18.4x 1 2.6x 1 31.9x 1 17306
Adani Total Gas Ltd 106.0x 0 25.6x 0 189.2x 0 4683
Average Multiple 11.4x 2.0x 18.8x
Median 10.1x 2.2x 15.9x
INDUSTRY OVERVIEW – GREEN HYDROGEN

● Globally, demand for hydrogen has increased by 17% between 2010 and 2018, used mostly to produce

ammonia and in refineries. With the global decarbonization push, current policy momentum, and
improvement in economics and durability of end-use technologies like fuels cells, hydrogen could serve
7%–18% of global final energy demand in 2050. Significant upside exists if net zero targets are pursued
seriously. The IEA projects potential hydrogen demand of 528 million tonnes under their net zero
scenario, up from 287 million tonnes as per their sustainable development scenario.

● As per Niti Ayaog, hydrogen demand in India can potentially grow more than fourfold between 2020 and

2050, amounting to around 29 million tonnes by 2050

● While steel and heavy-duty trucking will be the long-term driver for demand, in the near term, demand

will likely be driven by the more mature markets in industrial feedstock—ammonia and refining.
Increasing consumption from these two sectors can result in a demand of almost 11 million tonnes per
year by 2030 from the current demand of around 6 million tonnes.

● India’s Green hydrogen share of demand could grow from 16% in 2030 to almost 94% by 2050. This

translates to an implied cumulative electrolyser capacity demand of 20 GW by 2030 and 226 GW by

2050, promising a sizeable opportunity for indigenous manufacturing of a global emerging energy
technology. The cumulative value of the green hydrogen market in India could be $8 billion by 2030 and
$340 billion by 2050. Electrolyser market size could be approximately $5 billion by 2030 and $31 billion
by 2050.

● Government Policy:

o The Indian government's National Green Hydrogen Mission is a crucial factor in the growth of
Green Hydrogen, with a budget allocation of US$ 2.4bn including an outlay of US$ 2.1bn for the
Strategic Interventions for Green Hydrogen Transition (SIGHT) programme. The mission's goal is
to increase India's annual green hydrogen production to 5 million tonnes by 2030 with an
associated renewable energy capacity addition of about 125 GW in the country.
o Under SIGHT, two distinct financial incentive mechanisms – targeting domestic manufacturing of
electrolysers and production of Green Hydrogen – are provided under the Mission.
 ● Key players in this market include Cummins India, HydrogenPro AS, MHI, Stiesdal A/S, Siemens,

Thyssenkrupp, Acme Group, Azure Power, Adani Group, Reliance Industries Ltd., NTPC Limited, GAIL
Limited, L&T, Air Products, Bharat Petroleum Corporation Limited (BPCL), and JSW Energy Neo Ltd.
o RIL is investing heavily in this sector, with plans to produce green hydrogen at $1 per kg by
2030. The company has committed to a $10 billion investment over three years in new energy
business, aiming to become net carbon zero by 2035. RIL is also investing in the development of
hydrogen buses and coaches, in partnership with Olectra Greentech and Bharat Benz.

Green Hydrogen Players

Updated P&L
(Amt in INR Cr)
Particulars FY24 (P) FY23 (A) FY22(A)
Revenue from Operations 780 489.69 0.02
COGS 431.03 0.00
GP 58.66 0.02
GP Margins 12% 100%

Employee benefit cost 0.95 0.00

Other expenses 12.24 0.01
EBITDA 70 45.47 0.01
EBITDA Margins 9% 61%

Depreciation and Amortisation 0.01 0.00

Finance cost 3.24 0.43
Other income 0.56 0.15
Taxes 10.77 (0.07)

PAT 32.01 (0.20)