Over the past few decades, India has been one of the world’s fastest-growing economies and has seen tremendous growth in many different sectors. The country is rapidly urbanizing and industrializing, and its energy needs are soaring. This has shaken the gas industry in India, and its effects are being felt in the companies involved in the gas distribution sector. In this blog, we will explore how rising industries in India are helping in boosting gas stock performance.
India’s Economic Transformation and Its Impact on the Gas Sector
With India’s economic growth, there has been an increased need for clean, more sustainable sources of energy. Natural gas, one of the most significant components for powering industries, transportation, and residential sectors, has seen a dramatic increase in demand.
Natural gas is increasingly being recognized as a cleaner alternative to coal and oil, especially in urban areas where air pollution and environmental concerns are becoming critical issues. This has led to the popularity of these stocks as investment options.
For instance, Indraprastha Gas Limited (IGL) is one of the pioneer companies in natural gas distribution in India. The company primarily supplies CNG to the transportation sector and provides natural gas to industrial, commercial, and residential customers. Over the past few years, Indraprastha gas share price has shown steady growth.
The following trends in India’s rising industries are directly contributing to the growth of the gas sector:
Industrial Growth and Urbanization
Over recent years India’s industrial growth rate has been appreciating steadily, particularly in sectors like manufacturing, chemicals, and food processing. As these industries scale up, they will need a constant supply of energy, and often natural gas is their preferred fuel because of its cleaner burning nature.
Industries that use gas-based technologies are showing growing demand for natural gas such as fertilizers, power generation, steel, etc.
The transportation sector of India is transforming due to rising urbanization. There is a boom in the demand for gas as a result of the government’s push for cleaner transportation alternatives in vehicles like compressed natural gas (CNG).
Policy Support for Natural Gas
Natural gas is a cleaner alternative and the Indian government has been actively supporting its use. To increase the supply and availability of natural gas across the country, the Pradhan Mantri Urja Ganga project and the City Gas Distribution network have been launched.
The sole aim of these initiatives is to increase the coverage of natural gas use in both urban and rural communities, directly benefiting a gas distribution company such as Indraprastha Gas Limited (IGL).
Energy Transition and Environmental Regulations
Due to India’s commitment to combating global climate change and reducing its carbon footprint, India is shifting toward cleaner energy sources. Renewable energy projects are on the rise, and with stricter environmental regulations.
Industries and power plants are also increasingly turning to natural gas instead of coal as a more environmentally friendly alternative.
Growth of the Gas Distribution Network
A significant factor in the performance of gas stocks is India’s expanding gas infrastructure. With the government’s push to expand the City Gas Distribution (CGD) network, it has opened up new opportunities for gas companies to tap into previously underserved markets.
CGD has allowed companies such as Mahanagar Gas, Adani Gas, and Indraprastha Gas to expand their footprint in both urban and rural pockets.
India’s rapidly growing economy, its urbanization trends, and its push for cleaner energy sources are all driving factors behind the booming performance of gas stocks in the country. The surge in demand for natural gas across various industries, coupled with government initiatives and favorable policies, has created a favorable environment for gas distribution companies to thrive.