IRM Energy Ltd Q2FY26 – The Gas Is Flowing, But the Margins Are Leaking! A 59% CNG Mix, 217 Industrial Customers, ₹1,041 Cr Sales & a CEO Musical Chairs Saga

1. At a Glance

If “fueling India’s growth” had a middle-class cousin who occasionally misplaces his wallet, it would probably look likeIRM Energy Ltd. The company’s Q2FY26 performance sits in that weird zone between “promising” and “please check the gas meter again.” With amarket cap of ₹1,274 crore,current price of ₹311, andP/E ratio of 31, IRM Energy is the small-cap City Gas Distribution (CGD) player trying to flex in a league dominated by Adani Total Gas and Mahanagar Gas.

In the last three months, the stock returned a modest+11.5%, but investors are wondering if that’s optimism or just inertia. TheROCE is a thin 8.26%andROE is 4.68%, suggesting the company’s gas pipes are smooth, but the profit pipes are still a bit clogged.

On the upside, debt levels are negligible (Debt to Equity = 0.08x), meaning the company is financing its expansion without overdosing on borrowed air. But profits?PAT margin stands at 4.44%— enough to light a gas stove, not a bonfire.

As theBhagavad Gitareminds us,“You have a right to perform your duty, but not to the fruits thereof.”IRM seems to be living that verse literally — laying pipelines diligently, but the fruits (profits) are still ripening underground.

2. Introduction

Incorporated in 2015, IRM Energy is one of those young CGD companies trying to prove that not all energy stories are about coal, oil, or billionaire brothers. It’s the polite engineer of the energy world — quietly piping gas to homes, hotels, factories, and vehicles while competitors scream “energy transition” on CNBC.

The company operates acrossfour Geographical Areas (GAs)— Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath (UT/Gujarat), and Namakkal-Tiruchirappalli (Tamil Nadu). Each GA comes with25-year infrastructure exclusivityanddistrict marketing exclusivity ranging from 5–8 years. Basically, IRM’s got government permission to be the only gas plumber in town for quite a while.

The gas mix? About59% CNG(for vehicles) and41% PNG(for industrial, commercial, and domestic use). If that sounds lopsided, that’s because India’s drivers are far more enthusiastic about CNG than housewives are about PNG stoves.

And the customers? Over76,278 domestic,433 commercial, and217 industrialusers — all connected by an expanding pipeline network of~2,818 km.

But just when things looked stable, came a management shakeup:CEO Karan Kaushal resigned, replaced byManoj Kumar Sharma, while CFOHarshal Anjariamade a quick exit too. Corporate India’s HR departments must love these gas companies — there’s always a vacancy for “Key Managerial Personnel, effective immediately.”

3. Business Model – WTF Do They Even Do?

IRM Energy is aCity Gas Distribution (CGD)company — which basically means it ensures gas travels safely from the refinery to your car, stove, or industrial boiler.

Here’s how it works in simple desi economics:

• They buy gas(both domestic and imported Re-gasified LNG) under long-term contracts.
• They compress it (CNG)for vehicle refueling, or pipe it (PNG) to industries, hotels, and homes.
• They own and maintainthe pipeline network and CNG stations within specific territories.

Think of IRM as theSwiggy of gas— they don’t make the product; they deliver it efficiently, charge a delivery margin, and pray customers don’t switch suppliers (luckily, they can’t — PNGRB gives IRM local monopoly rights).

Itstwo product verticalsare:a)CNG (Compressed Natural Gas)— sold to auto-rickshaws, cabs, and buses.b)PNG (Piped Natural Gas)— sold to industries, hotels, bakeries, and homes.

Thecompany’s edgeis its early-mover advantage in smaller, less-penetrated regions like Banaskantha or Fatehgarh Sahib, which big players ignored. But here’s the rub — small towns also mean slower PNG uptake, so the CNG business carries most of the load.

And yes, they’re experimenting with cleaner bio-gas partnerships — atripartite agreement with GAIL (India) and IAV Biogas Pvt Ltd— for compressed biogas (CBG) supply. It’s like saying, “we’re still in natural gas, but we also care about cow dung.”

4. Financials Overview

Let’s look at how the gas pipeline of money is flowing: