Indraprastha Gas Shares in Focus Ahead of Its First-Ever Bonus Issue Decision

Shares of Indraprastha Gas Ltd. (IGL), a prominent city gas distributor, is set to attract attention as the company’s board meets on Tuesday, December 10, 2024. The agenda: considering a bonus issue of shares. This marks a significant milestone as it will be the first time IGL contemplates a bonus issue for its shareholders.

A Look Back: IGL’s Stock Split in 2017

IGL has a history of shareholder-centric moves. In 2017, the company announced a stock split, reducing the face value of each share from ₹10 to ₹2. The proposed bonus issue further strengthens its position as a pioneer among city gas distributors. Neither of its peers, Mahanagar Gas Ltd. (MGL) nor Gujarat Gas Ltd., have announced bonus share proposals in the past.

A Challenging Year for IGL

The year 2024 has been challenging for IGL, with its share price showing a negative return of 7% on a year-to-date basis as of December 10, 2024. October and November were particularly tough months, witnessing a dramatic 46% drop in the stock price.

December Recovery

Despite the earlier downturn, December brought a positive shift. IGL’s share price has rallied 18% month-to-date, reflecting renewed market interest ahead of the bonus issue announcement.

Industry Headwinds: APM Gas Allocation Reduction

The city gas distribution sector has faced headwinds in recent months, particularly due to the reduced allocation of APM (Administered Pricing Mechanism) gas for two consecutive months. This has impacted IGL and its peers, triggering sharp corrections in stock prices.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.