Summary
IRM Energy Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 11:00 a.m.
Event Participants
Executives 3 Arunkumar Salaru (CFO), Ashish Mittal (Head Commercial Marketing), M. K. Sharma (CEO)
Analysts 8 Abhir Pandit (Old Bridge MF), Dhruv Lawani (IAN Analytics), Harsh Maru (Vinamra Capital), Keshav Garg (CCIPL), Kiran Gadge (Knightstone Capital), Nitin Gandhi (Inoquest Advisors), Pawan Kumar (Ratna Traya), S. Ramesh, Shukrut Patel (Eyesight Fintrade), Varatharajan Sivasankaran (Antique Ltd)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (9M FY26) | ₹787 crore | +11% YoY; Growth driven by strong CNG volumes and PNG adoption. |
| Revenue (Q3 FY26) | ₹265 crore | +6% YoY; Increased contribution from Banaskantha and NT GAs. |
| EBITDA (9M FY26) | ₹82 crore | +4% YoY; Reflects operational efficiency and gas sourcing optimization. |
| EBITDA (Q3 FY26) | ₹30 crore | +34% YoY; Significant margin expansion due to better sales mix and lower gas costs. |
| EBITDA Margin (Q3) | 11.2% | +230 bps YoY; Improvement supported by higher CNG share (61% vs 53% YoY). |
| Operating EBITDA | ₹5.25 - ₹5.5/SCM | Current range; Management guides for improvement as network utilization scales. |
| Capital Expenditure | ₹103 crore | 9M total; ₹35.51 crore incurred in Q3 for ongoing infrastructure rollout. |
| Cash & Bank Balance | ₹255 crore+ | Strong liquidity position following IPO; term loan stands at only ₹54 crore. |
| CNG Stations | 127 stations | Cumulative; goal to reach 150+ stations by March 31, 2026. |
Geographic & Segment Commentary
- Banaskantha (BK): The most mature GA, contributing over 61% of total volumes. It saw 16% overall growth with CNG average sales per station at 4,800 SCM per day.
- Fatehgarh Sahib (FS): Faced a 7% YoY decline in industrial volumes as steel units switched to cheaper fossil fuels. Management expects recovery pending an NGT judgment on pollution controls in the region.
- Namakkal & Trichy (NT): High-growth potential GAs with aggressive infrastructure plans (₹250 crore capex over 18 months). Currently transitioning from liquid LNG to pipeline tap-offs; CNG sales average 1,089 SCM/day.
- Diu & Gir Somnath (DGS): Primarily a tourist-driven market with 10,000+ domestic connections. Transitioning to national grid sourcing via a new tap-off from the Chhara terminal.
Company-Specific & Strategic Commentary
- CNG-Centric Growth: CNG now contributes 61% of revenue (up from 53% YoY), acting as the primary margin driver with double-digit volume growth of 21%.
- Gas Sourcing Optimization: Management has reduced reliance on spot markets by securing long-term, Brent-linked contracts with Shell and GSPC through 2028.
- Infrastructure Acceleration: Company plans to spend ₹250 crore in NT GAs in the next 15-18 months to build out the pipeline network and meet IPO commitments.
- Operational Efficiency: Implemented solar group captive schemes, reducing electricity costs from ~₹9/unit to ₹3 - ₹4.5/unit.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | 12% - 15% YoY (FY27) | Expected from infrastructure ramp-up in NT and potential industrial recovery in FS. |
| EBITDA Margin | ₹5.25 - ₹5.5/SCM | Target for FY26-27 based on current sourcing mix and scale. |
| Station Network | 150+ stations by March 2026 | Accelerated commissioning in BK and NT GAs to drive volume. |
| Debt Profile | Peak Debt ~₹75 crore | Management plans to use IPO proceeds for NT capex, keeping leverage low. |
Risks & Constraints
| Risk | Context |
|---|---|
| APM Allocation Dip | APM gas allocation has dropped to ~37% from 80%+. Management is mitigating this by contracting long-term Brent-linked and HPHT gas. |
| Industrial Fuel Switching | In Fatehgarh Sahib, industries switched from gas to coal/liquid fuels. Recovery is dependent on regulatory (NGT) intervention against pollution. |
| Promoter License Fee | A 2% gross revenue license fee to the IRM Trust remains a drag on net margins; management is in discussions but no reduction has been finalized. |
| TN Infrastructure | Rocky soil conditions in Tamil Nadu GAs have slowered pipeline laying through HDD machines, though management remains ahead of demand. |
Q&A Highlights
Industrial Volume Recovery
- Question: What is the status of industrial customers returning to gas in Fatehgarh Sahib? (Abhir Pandit)
- Answer: Recovery is tied to a pending NGT judgment expected in early 2026. New industrial units are now only given “Consent to Operate” if they use natural gas. (M.K. Sharma)
Gas Sourcing & SCM Margins
- Question: How are you tracking margin stability given gas price volatility? (Shukrut Patel)
- Answer: We maintain 85% of sourcing in long-term/domestic contracts (APM, HPHT, Brent-linked) and 15% in spot to take market advantage. (Arunkumar Salaru)
Namakkal & Trichy Potential
- Question: How long will it take for newer GAs to reach Banaskantha’s volume levels? (Pawan Kumar)
- Answer: Expect 1,000 SCM/day per station to reach 2,500 SCM/day within 1.5 - 2 years as three-wheelers convert from LPG to CNG. (M.K. Sharma)
Capital Allocation
- Question: What is the peak debt expected post-CapEx? (Nitin Gandhi)
- Answer: We expect peak running debt of approximately ₹75 crore. We have ₹50 crore in undrawn limits but prioritize IPO funds for Namakkal/Trichy. (Arunkumar Salaru)
Key Takeaway
IRM Energy delivered a resilient Q3 FY26, characterized by a 34% YoY increase in EBITDA, driven by a strategic shift toward the higher-margin CNG segment which now constitutes 61% of total revenue. While industrial volumes in the Fatehgarh Sahib GA were pressured by fuel-switching, the company compensated with 21% volume growth in CNG and 25% in domestic PNG. Strategically, the firm is insulating itself from declining APM gas allocations (now at ~37%) by securing long-term HPHT and Brent-linked contracts through 2028. Management indicated a robust infrastructure pipeline, with ₹250 crore earmarked for the Namakkal and Trichy districts, aiming to increase the station count to over 150 by year-end. With a lean balance sheet and a focus on 12%-15% volume growth, the company is well-positioned for margin expansion as newer GAs mature, provided regulatory rulings support the return of industrial gas demand.
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