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Adani Total Gas : Assessing Revenue Growth and Valuation Metrics

Company Overview 

Adani Total Gas Limited (ATGL), a joint venture between the Adani Group and TotalEnergies both owning 37.4 percent equity shares in the company, is one of the big players in CGD in India. The company’s primary operations include transportation gas supply and supply of natural gas for domestic, commercial and industrial purposes. ATGL commenced operations in 2004 and has grown to serve 34 districts while having equity stakes in a further 19 districts through a joint venture with the Indian Oil Corporation known as Indian Oil Adani Gas Pvt Ltd (IOAGPL). The cumulative distribution of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) with the active distribution of 577 CNG stations within the network by October 2024 remain the core businesses within its operations contributing positively to its operational finance. Consistent with its promise to sustainability, the company has diversified its operations into innovative energy solutions through its subsidiary Adani TotalEnergies E-Mobility Limited, focused on biogas, LNG, green hydrogen and electric vehicle infrastructure. Notwithstanding recent controversies sparked off by the allegations involving its parent company concerning corporate governance, ATGL rests the arguments on premises that the concerns surrounding their investment will lead to growth and therefore innovation which it has funding of $375 million sourced internationally to expand its distribution network across 13 states that is in line with India’s clean energy vision. 

Returns Summary 

YTD	1 Month	6 Month	1 Year	2 Year	3 Year	5 Year
-22.46%	-5.54%	-13.68%	-22.46%	-79.26%	-55.29%	371.14%

3Years Return: SBI Ltd. v/s Nifty 50 

Shareholding Pattern 

Key Metrics 

Metrics	–
Mkt Cap (INR Cr):	83,230 Cr.
52-week H/L:	1198/546
PE Ratio:	120.81
Dividend yield:	0.03%
ROCE:	21.26%
P/B:	21.5
NSE Code:	ATGL

Financial Trends 

Year	Sales (₹ Cr)	Operating Profit (₹ Cr)	OPM (%)	Net Profit (₹ Cr)	EPS (₹)	Reserves (₹ Cr)	Borrowings (₹ Cr)	Fixed Assets (₹ Cr)	Debt/Equity
Mar-18	1,374	366	27%	162	6.31	759	1,345	897	1.77
Mar-19	1,719	455	26%	229	2.08	992	394	980	0.4
Mar-20	1,875	595	32%	436	3.97	1,361	428	1,198	0.31
Mar-21	1,696	704	42%	463	4.21	1,824	529	1,379	0.29
Mar-22	3,038	773	25%	509	4.63	2,306	1,035	1,733	0.45
Mar-23	4,378	870	20%	546	4.97	2,831	1,422	2,335	0.5
Mar-24	4,475	1,104	25%	668	6.07	3,470	1,557	3,174	0.45

Peer Comparison 

Company	Price (₹)	Market Cap (₹ Cr)	P/B	P/E	EPS (₹)	ROE (%)	ROCE (%)	P/S	EV/EBITDA
Adani Total Gas	761.05	83,701.05	21.5	120.81	6.3	20.09	21.26	18.72	69.58
Gujarat Gas	498.7	34,330.02	4.32	27.1	18.4	15.56	21.65	2.19	15
Indraprastha Gas	415.65	29,095.53	3.1	18.1	22.96	22.36	29.86	2.08	10.55
Gujarat State Petronet	361.9	20,418.81	1.93	18.16	19.93	13.15	16.86	10.05	11.88
Mahanagar Gas	1,284.40	12,687.02	2.29	11.04	116.37	27.79	37.6	2.03	6.71
Confidence Futuristic	89.7	224.43	1.6	83.78	1.07	1.86	2.63	44.36	58.09

Latest News

Adani Total Gas has reported a 7.2% revenue growth over the past year and an impressive 111% growth over three years. Despite industry-wide challenges, including a projected 5.1% revenue decline, the company has maintained resilience, justifying its elevated price-to-sales (P/S) ratio.

Investors remain optimistic about its ability to outperform peers, but future growth hinges on overcoming challenges like declining natural gas allocations. With revenue growth exceeding industry trends, Adani Total Gas continues to attract attention, though its ability to sustain this momentum will be crucial.

Stock Analysis 

On December 31 2024 Adani Total Gas Ltd. Share price close in a market fall-down by 3.28% and made an intraday low at 726.6. This fall came on the heels of four consecutive days of gain and was in stark contrast to 2.46 percent fall (over the past month) with the Sensex. One of the major reasons for the drop is the decrease in APM-priced domestic gas allocation. In this regard GAIL India Limited vide letter dated November 15 2024, communicated to ATGL, a reduction in gas allocation by 13% effective from November 16 2024. Its relatively decrease affect all the City Gas Distribution CGD sector. It also expected to speak negatively of the firm about profits. Noting revenue, the last push could be rationalized on a standalone basis by ATGL is basically growing revenue in some form of consistent manner. This may lead investors speculate that revenues will come through hard and glaze in the coming period and allow sales annual growth. According to the consensus of analysts, the stock’s target price is ₹1,085.00, which means that it can potentially gain by around 59.72% from the last closing price of ₹679.30.   The recent cuts on gas allocation and potential cuts on profitability should sway investors and affect stock performance in the near term, however. How quickly is still dependent on how ATGL manages these issues and tailors its approach to mitigate the effects of declining natural gas supplies. It is up to investors to closely watch and see what operational improvements ATGL makes on top of market developments to determine when a turnaround in the company’ stock performance will occur.  

Investors are advised to keep their eyes on the companies’ financials and strategic decisions which will provide further direction as to take the appropriate action in short term. However, the future from long term perspective looks attractive.