Torrent Gas Limited IPO

01At a glance

What the company does: buys natural gas and distributes it within the geographical areas it is licensed for: compressed natural gas (CNG) for vehicles, and piped natural gas (PNG) for homes, shops and factories (AP p.3).

Who pays it: mostly vehicle owners, through CNG stations at the fuel outlets of Indian Oil, Hindustan Petroleum and Bharat Petroleum. Those three oil companies alone were 52.74% of revenue in the June 2026 quarter (DRHP p.39). CNG and compressed bio-gas were 69.24% of FY26 revenue (AP p.12).

Why it is raising money: it is not. The offer is entirely an offer for sale by Torrent Investments Limited, the promoter; the company receives no proceeds, and the stated objects are the benefits of listing and carrying out the sale (AP p.9).

How fast it has grown: revenue went from ₹31,536 million in FY24 to ₹59,334 million in FY26, and gas volume, excluding trading, from 504.95 to 947.73 million standard cubic metres (AP p.10, AP p.11). The company lost ₹173 million in FY24 and earned ₹2,809 million in FY26 (AP p.10).

The one thing to understand: this is a young network still being built out, with volume rising fast and margin per unit of gas moving with gas costs. Gross margin per standard cubic metre fell from ₹18.53 in FY24 to ₹15.93 in FY26, then recovered to ₹18.05 in the June 2026 quarter (AP p.10).

02The business, in plain words

A city gas distributor is given the exclusive right, by the regulator PNGRB, to lay pipelines and supply gas in a defined area. It buys gas from producers and importers, pipes it to its own network, and sells it to vehicles as CNG and to homes and businesses as PNG. It earns the difference between what it pays for gas and what it can charge, less the cost of running the network.

A car or auto-rickshaw owner needs fuel, or a household needs cooking gas → Torrent Gas buys gas from domestic allocation, the market or imported LNG → it pipes the gas through its city network to CNG stations or directly to the customer → it is paid per unit of gas, at prices it sets within the market.

As of 30 June 2026, the company had 557 CNG stations and about 271,983 PNG customers, of which 270,242 were homes and 1,741 industrial and commercial users (AP p.3). It operates in 17 authorised geographical areas covering 34 districts in seven states and one union territory (AP p.3). The regulator grants eight years of marketing exclusivity and 25 years of infrastructure exclusivity in each area (DRHP p.173).

Earnings equation: Gross margin ≈ gas volume sold × (selling price − gas cost) per standard cubic metre. In FY26 that margin was ₹15.93 per standard cubic metre on 947.73 million standard cubic metres (AP p.10, AP p.11).

03Where the money comes from

Source: AP p.3.

The five largest customers were 68.44%, 63.07% and 59.73% of revenue in FY24, FY25 and FY26, and 55.49% in the June 2026 quarter (AP p.3). The largest are the oil marketing companies at whose outlets CNG stations sit, and the revenue they pay comes from many individual dealers (DRHP p.39).

Source: DRHP p.39.

04The growth record

Source: AP p.10. EBITDA margin is our arithmetic.

Receivable days went from 24 in FY24 to 18 in FY26 (DRHP p.42). Other income was ₹225.57 million in FY26 against restated profit before tax of ₹3,722.88 million, or 6.1% of it (our arithmetic, DRHP p.91).

For the June quarter, revenue was ₹17,880.11 million in 2026 against ₹13,967.81 million in 2025, EBITDA ₹3,067.44 million against ₹1,851.91 million, and profit after tax ₹1,298.54 million against ₹556.78 million (AP p.10).

Source: AP p.10, AP p.11.

05What the growth is made of

Volume did the work. Gas sold, excluding trading, grew 39.34% in FY25 and 34.70% in FY26 (AP p.11), while gross margin per standard cubic metre fell from ₹18.53 to ₹15.93 (AP p.10). Revenue grew about as fast as volume, so the average selling price held roughly level, while gas cost took a larger share of costs: purchased gas went from 69.15% of total expenses in FY24 to 79.01% in FY26 and 79.29% in the June 2026 quarter (AP p.12).

The network grew too. PNG connections doubled from 121,797 to 242,181 over two years, and CNG stations rose from 439 to 557 (AP p.11). No new CNG stations were added in the June 2026 quarter (AP p.11).

Operating leverage explains the turn to profit. EBITDA per standard cubic metre rose from ₹7.93 in FY24 to ₹8.98 in FY26 even as gross margin per unit fell, and the FY24 loss, the document says, came from the start-up phase across several areas, upfront pipeline and station capex, depreciation and finance costs ahead of volume (DRHP p.30).

06Earnings quality

Operating cash flow exceeded profit in every year, ₹8,913.55 million against ₹2,808.54 million of profit in FY26 to because depreciation on the network is large (AP p.10). Investing outflows were ₹6,366.72 million, ₹5,519.75 million and ₹6,735.60 million over FY24 to FY26 (AP p.10), so most operating cash is going back into the network.

The net working capital cycle was 1.89 days in FY26 and 5.47 days in the June 2026 quarter (AP p.11). Customers pay quickly in this business.

The document's own measure puts its gross margin at ₹18.05 per standard cubic metre in the June 2026 quarter against an average of ₹11.84 for the city gas companies CRISIL benchmarked (DRHP p.254). It attributes this to a sourcing portfolio spread across administered-price domestic gas, new-well and high-pressure gas, and imported LNG on several price benchmarks (DRHP p.33, DRHP p.254).

07The balance sheet

Source: AP p.10, AP p.11. Borrowings are total adjusted borrowings as the document defines them; net debt to equity is in times.

Share capital is ₹16,750 million, so retained earnings are still small: net worth is only about ₹5,450 million above paid-in capital at June 2026 (AP p.10, our arithmetic). Capital commitments for property, plant and equipment were ₹6,341.15 million at 30 June 2026, and the company has given performance bank guarantees to PNGRB against its minimum work programme in each area (DRHP p.467). Some unsecured loans from Axis Bank and Shinhan Bank are repayable on demand (DRHP p.70).

08What the money is for

Nothing, for the company. The offer is an offer for sale of up to 335,000,000 equity shares of ₹10 each by Torrent Investments Limited. The selling shareholder receives the proceeds after expenses and taxes (AP p.9).

09Who is selling

Source: AP p.1.

The offered shares are 20% of the 1,675,000,000 shares in issue, all held by Torrent Investments and its six nominees (AP p.9). The average cost of ₹10.00 a share equals the face value (AP p.1).

10Promoters

The promoters are Torrent Investments Limited, four Mehta Family Trusts, and Sudhir Mehta, Samir Mehta, Jinal Mehta and Varun Mehta (AP p.4). The document names the promoters in full as Torrent Investments Limited, Mehta Family Trust 1, Mehta Family Trust 2, Mehta Family Trust 3, Mehta Family Trust 4, Sudhir Uttamlal Mehta, Samir Uttamlal Mehta, Jinal Sudhirbhai Mehta and Varun Sudhir Mehta (DRHP p.3). Torrent Investments is registered with the RBI as a core investment company and is the holding company for the Torrent Group's businesses in healthcare, power, city gas distribution and electricals (AP p.5).

The board has six directors: Jinal Mehta, chairman and non-executive director; Manoj Jain, managing director; Varun Mehta, non-executive director; and three independent directors (AP p.13). The chief financial officer is Naresh Kumar Poddar (AP p.13).

The company leans on the rest of the group. It has a binding term sheet with Torrent Power for joint gas procurement and regasification at Dahej for ten years from 2027, valid until 2036; group credit standing supports the standby letters of credit LNG suppliers require; and its registered office is leased from Torrent Power (DRHP p.31, DRHP p.32).

11Who already owns it

Torrent Investments owns 100% before the offer, with six individuals holding one share each as its nominees (AP p.9). No other promoter or promoter-group member holds shares (AP p.9). After the offer, if every offered share is sold, Torrent Investments would hold 80% and the public 20%.

12What changed just before the IPO

• Confidential filing: a pre-filed draft was lodged on 19 March 2026; this updated draft followed on 8 September 2026 after SEBI's observations (DRHP p.13, DRHP p.15).
• Dholpur CGD: the company raised its stake in Dholpur CGD from a joint venture to a subsidiary on 27 March 2025, acquiring 51% from another city gas company; PNGRB's approval required a ₹32.92 million penalty for Dholpur's shortfall against its minimum work programme (DRHP p.43, DRHP p.97, AP p.14).
• Promoter company: Torrent Investments converted from a private to a public company on 13 February 2025 (AP p.5).
• Last allotment: 160,000,000 equity shares were allotted to Torrent Investments Limited in a rights issue at ₹10 a share on 20 February 2023 (DRHP p.118).
• Bonus issue: the company has not issued any equity shares by way of a bonus issue (DRHP p.120).
• Auditors: the document states there has been no change in the statutory auditors in the three years before the updated draft (DRHP p.110).
• Public company: Torrent Gas became a public limited company with a certificate of incorporation dated 19 October 2023 (DRHP p.293).

13Capacity and expansion

At March 2026 the network had 19,199 inch-km of pipeline, 557 CNG stations and 240,728 domestic PNG connections (DRHP p.211). Capital commitments of ₹6,341.15 million were outstanding at June 2026 (DRHP p.467). In each licensed area, the company is bound by a minimum work programme, a set number of connections and stations by set dates, backed by bank guarantees to PNGRB (DRHP p.467).

14Market size and industry structure

India's city gas pipeline network grew about 7.4 times, from roughly 44,000 inch-km to 326,714 inch-km in May 2026, according to the CRISIL report cited in the offer document (DRHP p.165). Each area is awarded by PNGRB in bidding rounds, with exclusivity periods for marketing and infrastructure (DRHP p.173). The document notes coverage is uneven, with mature networks in some states and low penetration in eastern and north-eastern India (AP p.4).

Long-term demand for CNG faces electric vehicles and other alternatives, which the document lists among its top risks (AP p.12).

15Competitive position

What the document claims, and what it rests on:

• Highest gross margin per unit among benchmarked city gas companies in FY26, per CRISIL (DRHP p.254).
• A diversified gas supply portfolio, with contracts over several tenors and price benchmarks, including Brent and Henry Hub (DRHP p.254).
• Group backing for LNG sourcing and credit support (DRHP p.31).

Against that: the network is small beside the listed leaders. At March 2026, Indraprastha Gas had 32,873 inch-km of pipeline and 3,394,974 domestic PNG connections, and Adani Total Gas 20,132 inch-km and 1,043,925, against Torrent Gas's 19,199 and 240,728 (DRHP p.211). Revenue depends heavily on three oil companies' outlets (DRHP p.39).

16Peers the company named

Source: DRHP p.139, DRHP p.140. Ratios use closing prices on 4 September 2026.

The document gives an industry P/E average of 58.51, the midpoint of its two peers (DRHP p.137). For Torrent Gas it gives FY26 earnings per share of ₹1.68, net asset value per share of ₹12.49 and return on net worth of 13.43% (DRHP p.139). No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Gas cost. Purchased gas is about four fifths of total expenses; a rise in LNG or domestic gas prices may not be passed on in full (AP p.12).
• Three oil companies. Indian Oil, Hindustan Petroleum and Bharat Petroleum together paid 52.74% of revenue in the June 2026 quarter; if outlets hosting CNG stations close or change terms, volume falls (DRHP p.39).
• Electric vehicles. CNG and bio-gas are about 70% of revenue, and wider EV adoption could reduce CNG demand over time (AP p.12).
• Group dependence. Gas procurement, regasification, credit support and some senior staff come through the Torrent Group (DRHP p.31).
• Debt covenants and demand loans. Borrowings carry covenants, and some unsecured loans are repayable on demand (AP p.12, DRHP p.70).
• Lender affiliated with a lead manager. Axis Bank, an affiliate of the book-running lead manager Axis Capital, has lent to the company (AP p.12).
• Profitability is recent. The company lost money in FY24 (AP p.12).

18Litigation and regulatory matters

Source: AP p.13, AP p.14. Amounts are to the extent the document could quantify them.

The subsidiary figure includes the PNGRB matter over Dholpur CGD, where a ₹32.92 million penalty was levied for the minimum-work-programme shortfall (AP p.14). No material civil litigation and no SEBI or stock-exchange action against the promoters is shown (AP p.14).

19Related-party transactions

The related-party schedule lists transactions with Torrent Power, Torrent Pharmaceuticals, Torrent Hospitals, Torrent Solar Power, Torrent Investments and the Dholpur subsidiary, each a small share of revenue in the years shown (DRHP p.96, DRHP p.97, DRHP p.98). The larger links are not payments but arrangements: the Torrent Power term sheet for LNG and regasification, group credit support, and the office lease (DRHP p.31, DRHP p.32).

20What the offer document does not say

In the sections read for this study, the document does not give:

• The terms of the Torrent Power term sheet: volumes, pricing or cost to the company, beyond its existence and duration (DRHP p.31).
• The gas sourcing mix by volume, such as the share of administered-price gas against LNG.
• Progress against the minimum work programme in each area, and the value of guarantees at risk.
• Why gross margin per unit fell for two years and then rose in the June 2026 quarter.
• The price band, lot size or issue dates, which is normal at this stage.

21Five questions for management

1. What share of FY26 gas came from administered-price allocation, and what happens to margin as that allocation is cut?
2. Gross margin per standard cubic metre fell from ₹18.53 to ₹15.93 and then rose to ₹18.05 in one quarter, what changed?
3. On what terms will Torrent Power supply regasified LNG from 2027, and who bears the cost if the term sheet is not renewed after 2036?
4. How far behind or ahead of its minimum work programme is each licensed area, and what penalties are exposed?
5. With 52.74% of revenue from three oil companies, what are the terms and duration of the station agreements at their outlets?

2Sources and cited facts

This study was read from 2 documents the company filed. The 95 figures it cites are listed under the document each came from, with the page and the sentence as printed.