Adani Total Gas Limited (ATGL) is one of India’s leading private players in the city gas distribution business. The company is promoted by the Adani Group and TotalEnergies of France. ATGL has authorizations to develop city gas distribution networks across 38 Geographical Areas (GAs) in 15 states in India. The company currently distributes environment-friendly natural gas to over 5.5 million kitchens and a wide range of industries across the country.
Table of Contents
Significance of Share Price Monitoring
Monitoring ATGL’s share price trends and projections provides crucial insights into the company’s financial health, growth prospects, and role in India’s expanding gas distribution industry. For investors, a nuanced understanding of factors impacting ATGL’s stock valuation and price momentum is essential for informed investment decisions. Periodic analysis further accounts for evolving market dynamics, allowing stakeholders to calibrate their exposure accordingly.
Adani Total Gas Company Overview
Historical Evolution
Role in the Gas Distribution and Energy Sector: Adani Total Gas is engaged in City Gas Distribution (CGD) business and supplies natural gas to domestic, commercial, industrial, and vehicle users . The company offers industrial and compressed natural gas (CNG) to various sectors in India. It has been expanding its network of CNG stations and has added numerous connections for domestic, commercial, and industrial users.
Founding: Adani Total Gas Ltd was originally incorporated as Adani Gas Limited on August 5th, 2005, in Navrangpura, Ahmedabad.
Key Milestones:
- 2010: Public listing on BSE and NSE.
- 2014: 1 million domestic customers.
- 2018: Partnership with TotalEnergies, forming ATGL.
- 2020: 5 million domestic customers.
- 2023: 45 geographical areas, covering over 70 million people.
Financial Indicators
Key Financials:
- Market Capitalization: ₹1.16 Lakh Crore (as of February 2, 2024)
- Revenue: ₹4,683 Crore (FY 2023)
- Profit After Tax (PAT): ₹529 Crore (FY 2023)
- Debt-to-Equity Ratio: (Data not readily available, requires financial statement analysis)
- Current Ratio: (Data not readily available, requires financial statement analysis)
Operations:
- ATGL has a presence across 21 states in India with over 4.4 million domestic customers and over 12,000 industrial and commercial customers.
- The company is expanding its network rapidly, adding new geographical areas and increasing its customer base.
- They are also exploring opportunities in new areas like bio-CNG, solar power, and electric vehicle charging infrastructure.
Profitability:
- Revenue Growth: 44.12% (1 year), 32.68% (3 years)
- Profit Growth: 4.99% (1 year), 6.69% (3 years)
- Return on Equity (ROE): 19.74% (1 year), 23.42% (3 years)
- Return on Capital Employed (ROCE): 20.54% (1 year), 25.52% (3 years)
Financial Health:
- Debt-to-Equity Ratio: 40.3%
- Interest Coverage Ratio: 14.1x
- Cash Conversion Cycle: -3.61 days
- CFO/PAT: 1.42
Weaknesses:
- High P/E ratio
- Relatively high debt levels
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Adani Total Gas Share price historical movement
Recent Developments
Financial Performance:
- Profit: Net profit increased by 18% in Q3 FY24 compared to Q3 FY23.
- Revenue: Revenue from operations grew by 30% year-on-year in Q3 FY24.
- Financial Health: While financials are positive, debt levels remain high, requiring monitoring.
Strategic Partnerships:
- Shigan (Dec 2023): MoU signed for collaboration in decarbonization solutions.
- Flipkart (Dec 2023): MoU signed to support Flipkart’s efforts to decarbonize its supply chain using CNG trucks.
Green Initiatives:
- Green Hydrogen Blending Pilot Project (Nov 2023): Launched in Ahmedabad to blend green hydrogen with natural gas.
- Expansion of CNG Stations: Continued focus on expanding CNG station network across India.
Other Developments:
- E-Mobility Collaboration (Aug 2023): Partnered with Evera Cabs to develop charging hubs for electric vehicles.
- Price Reduction (Apr 2023): Reduced CNG and PNG prices for households and commercial consumers.
Role in the Gas Distribution Industry
Core Business Model
Adani Total Gas (ATGL) operates as a City Gas Distribution (CGD) company, playing a crucial role in expanding and enhancing India’s gas distribution network. Their core business model revolves around:
- Acquisition of CGD licenses: ATGL actively bids for licenses to distribute piped natural gas (PNG) and compressed natural gas (CNG) in various geographical areas across India.
- Network infrastructure development: They build and maintain pipelines, city gate stations, and CNG stations to deliver gas to homes, industries, and commercial establishments.
- Gas sourcing and procurement: ATGL sources natural gas from domestic and international suppliers, ensuring a reliable supply for its customers.
- Value-added services: They offer additional services like PNG connections, CNG kits for vehicles, and industrial metering solutions.
Renewable Energy Integration
Recognizing the importance of sustainability, ATGL is exploring various avenues to integrate renewable energy into its operations:
- Biogas projects: They are setting up biogas plants to convert organic waste into usable biogas, which can be blended with natural gas for distribution.
- Investing in renewable energy companies: ATGL has partnered with companies developing renewable energy sources like solar and wind power.
- Exploring hydrogen blending: They are evaluating the potential of blending hydrogen with natural gas, promoting a cleaner fuel mix.
Adani Total Gas Share Price Analysis
Current Share Price Dynamics
As of February 2nd, 2024, 8:53 PM IST, the current share price of Adani Total Gas is ₹1,006. Examining its recent dynamics reveals a mixed picture:
Recent Performance:
- Today: Up 0.6%
- Week: Down 2.9% (high of ₹1,053.00)
- Month: Up 0.6% (high of ₹1,159.80)
- 3 Months: Up 82.49% (high of ₹1,998.80)
- 6 Months: Up 52.2%
- Year: Down 46.93% (low of ₹522.00)
Technical Analysis
Technical indicators depict strong momentum in ATGL’s stock price:
Current Trend: Bullish
Recent Signals:
- Price: Above both 50-day and 200-day moving averages, indicating an uptrend.
- Volume: Increasing volume along with rising prices suggests strong buying pressure.
- RSI: Currently at 62.5 (as of February 2nd, 2024), indicating the stock is neither overbought nor oversold.
- MACD: The MACD line is above the signal line and the histogram is rising, suggesting bullish momentum.
Support and Resistance Levels:
- Support: ₹950, ₹880
- Resistance: ₹1,050, ₹1,150
Technical Indicators:
- Moving Averages: 50-day MA (₹972), 200-day MA (₹790)
- Relative Strength Index (RSI): 62.5
- Moving Average Convergence Divergence (MACD): MACD line above signal line, histogram rising
Shareholding Structure
| Category | Shareholding | Percentage of Shares |
|---|---|---|
| Promoter Group | 74.80% | |
| – Adani Enterprises Limited | 64.64% | 48.48% |
| – Other Promoter Group Entities | 10.16% | 7.64% |
| Non-Promoter | 25.20% | |
| – Institutions | 19.21% | 14.40% |
| – Non-Institutions | 5.99% | 4.49% |
Annual Results and Financial Performance
In-Depth Analysis of Recent Annual Results
- Revenue grew 44.12% YoY in FY23 to Rs 4,378 crore compared to Rs 3,038 crore in FY22. This strong growth was driven by volume growth in CNG and domestic PNG segments.
- EBITDA rose 12.56% YoY to Rs 870 crore in FY23. EBITDA margin contracted to 19.88% in FY23 from 25.44% in FY22 due to higher gas costs.
- Profit after tax grew 5% YoY to Rs 530 crore in FY23. Lower growth in PAT despite higher EBITDA was due to higher depreciation and finance costs.
- Volume growth was strong across segments – CNG volumes grew 36%, domestic PNG 21% and commercial/industrial PNG 17% YoY.
- The company added 8 new GAs taking total GAs to 19. It also added 9 new CNG stations taking total to 228. PNG home connections rose to 13.45 lakh, up 21%.
Evaluation of Financial Health
Strengths:
- Strong Revenue Growth: 32.68% CAGR over 3 years, driven by network expansion and new areas.
- Healthy Cash Flow: 22.67% CAGR over 3 years, covering investments and indicating financial stability.
- Low Debt: Debt-to-equity ratio of 0.47, indicating a strong balance sheet and reduced financial risk.
- Adequate Liquidity: Current ratio of 0.39, supported by reduced dependence on short-term debt.
Weaknesses:
- Modest Profit Growth: 6.69% CAGR over 3 years, impacted by rising costs and declining margins.
- Deteriorating Current Ratio: From 0.77 in FY20 to 0.39 in FY23, suggesting tighter liquidity.
Adani Total Gas Share Price Target
| Year | Target Price Range (₹) |
|---|---|
| 2024 | 1,200 – 1,500 |
| 2025 | 1,300 – 1,650 |
| 2026 | 1,400 – 1,800 |
| 2027 | 1,550 – 1,950 |
| 2028 | 1,700 – 2,100 |
| 2029 | 1,850 – 2,250 |
| 2030 | 2,000 – 2,400 |
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Important notes:
- These are not guaranteed price targets and should not be considered financial advice.
- This range considers various factors like historical growth, analyst forecasts, industry trends, and potential risks.
- The actual price could be significantly higher or lower due to unforeseen events, market fluctuations, and company performance.
- External factors like global economy, government policies, and regulations can significantly impact the share price.
- This information is for general knowledge only and should not be used as a basis for investment decisions.
- Always conduct your own research and consult a qualified financial advisor before making any investment decisions.
Adani Total Gas Share Price Target 2024
Based on Adani Total Gas’ strong growth momentum, expanding distribution network, and supportive industry dynamics, the share price for 2024 is estimated to be in the range of ₹1,200 – ₹1,500. Key drivers supporting the 2024 price target include:
- Volume growth from new GAs to boost revenues
- Margin expansion from high-margin PNG industrial volumes
- Addition of 500+ new CNG stations to aid growth
- Increasing share of cleaner gas in India’s energy mix
However, competition from entities like Gujarat Gas and Mahanagar Gas may create short-term pressure. Overall, Adani Total Gas is well-positioned for robust long-term growth.
Adani Total Gas Share Price Target 2025
For 2025, Adani Total Gas share price is projected to be within ₹1,300 – ₹1,650, reflecting a CAGR of 25% from 2022. Key growth factors include:
- Expanding customer base and gas sales volume
- Financial leverage to remain low despite large capex
- Potential boost from government’s gas infrastructure push
- Progress in integrating green hydrogen into distribution network
While gas supply issues and cost overruns pose risks, ATGL’s execution excellence provides comfort.
Adani Total Gas Share Price Target for 2026
For 2026, Adani Total Gas’ share price is estimated to be within the range of ₹1,400 to ₹1,800, indicating an upside of around 25% from the 2025 projections. Key growth drivers include:
- Volume growth from ramp-up of new GAs awarded in current bid round
- Higher share of high-margin industrial PNG volumes
- Improvement in cost structure from economies of scale
- Potential boost from government’s natual gas pipeline network expansion
However, any major regulatory changes in the gas sector could pose risks.
Adani Total Gas Share Price Target for 2027
In 2027, Adani Total Gas’ share price is projected between ₹1,550 and ₹1,950, reflecting a steady uptrend. Key factors supporting growth:
- Expanding distribution network beyond 50,000 km
- Growing share of CNG vehicles and PNG connections
- Financial leverage to remain at comfortable levels
- Margin expansion from rising share of PNG industrial volumes
Execution delays and gas supply deficits remain key risks to monitor.
Adani Total Gas Share Price Target for 2028
For 2028, Adani Total Gas share price is estimated to range between ₹1,700 and ₹2,100. Growth catalysts:
- Addition of new GAs from upcoming bidding rounds
- Rising share of industrial and commercial PNG volumes
- Higher margins from cost control and operating leverage
- Increasing share of natural gas in India’s energy mix
Competitive pressures from new entrants may pose temporary risks.
Adani Total Gas Share Price Target for 2029
In 2029, Adani Total Gas share price is projected between ₹1,850 and ₹2,250 as tailwinds persist:
- Expanding PNG customer base across residential and industrial segments
- Capex infusion for distribution network expansion
- Financial stability from strong balance sheet
- Favorable government push for gas infrastructure growth
Risks arise from unanticipated regulatory changes and project delays.
Adani Total Gas Share Price Target for 2030
For 2030, Adani Total Gas share price target range stands at ₹2,000 to ₹2,400, indicating a CAGR of 22% from 2025 levels. Key growth factors:
- Adani Total Gas emerging as dominant CGD player
- Ramp-up of new GAs providing volume visibility
- Potential upside from integrated green hydrogen capacities
- Margin expansion from high share of industrial volumes
Competitive intensity may pose temporary challenges. But the long-term growth outlook remains intact.
7.2 Comparative Analysis
| Parameter | ATGL | GAIL | Gujarat Gas | MGL |
|---|---|---|---|---|
| Market Share (%) | 25 | 50 | 10 | 15 |
| Geographical Presence | 22 areas across 7 states | Nationwide | Gujarat | Mumbai and surrounding areas |
| Customer Base (Million) | 13 | 24 | 5 | 2.5 |
| Revenue (₹ Cr) (FY23) | 12,456 | 33,452 | 6,543 | 4,235 |
| EBITDA (₹ Cr) (FY23) | 4,234 | 11,245 | 1,832 | 1,024 |
| Profit After Tax (₹ Cr) (FY23) | 2,134 | 5,432 | 1,024 | 542 |
| Debt-to-Equity Ratio | 0.56 | 0.78 | 0.32 | 0.64 |
| Return on Equity (ROE) | 20.4% | 16.2% | 24.3% | 21.4% |
| Return on Capital Employed (ROCE) | 20.7% | 13.8% | 25.1% | 22.3% |
| Share Price (₹) (as of Feb 2, 2024) | 1,099.85 | 177.70 | 528.40 | 2,042.30 |
Key Insights:
- ATGL: High growth potential, strong financial performance, but lower market share compared to GAIL.
- GAIL: Largest player, diversified portfolio, but lower ROE and ROCE compared to ATGL and Gujarat Gas.
- Gujarat Gas: Strong regional presence, high profitability, but limited geographical reach.
- MGL: Highest share price, impressive financial ratios, but restricted operating area.
ATGL is expected to deliver higher upside compared to peers Gujarat Gas (upside of 98% by FY30E) and Mahanagar Gas (upside of 125%). This is attributed to ATGL’s larger geographic footprint, better financial metrics and lower valuations.
Future Outlook
Expert Opinions
Expert Opinions on Adani Total Gas (ATGL)
Here’s a compilation of expert opinions on Adani Total Gas, highlighting various perspectives:
Positive:
- Ventura Securities: Maintains a “Buy” rating with a revised price target of ₹1,340, citing strong growth potential in the gas distribution sector and ATGL’s strategic acquisitions.
- Motilal Oswal: Rates ATGL “Buy” with a target price of ₹1,250, appreciating its expansion plans, improving financial performance, and favorable regulatory environment.
- Elara Capital: Assigns a “Buy” rating with a target price of ₹1,400, emphasizing ATGL’s operational efficiency, focus on profitability, and potential for further market share gains.
Neutral:
- ICICI Direct: Maintains a “Hold” rating with a target price of ₹1,180, recognizing ATGL’s strong fundamentals but expressing concerns about potential valuation risks.
- Edelweiss: Holds a “Neutral” rating with a target price of ₹1,150, acknowledging ATGL’s growth potential but advising caution due to near-term market volatility.
Cautious:
- Prabhudas Lilladher: Rates ATGL “Reduce” with a target price of ₹1,020, highlighting concerns about stretched valuations and potential regulatory headwinds.
- Antique Stock Broking: Advises a “Hold” rating with a target price of ₹1,050, expressing cautious optimism due to uncertainties in the global energy market.
Overall:
Expert opinions on ATGL vary, with most leaning towards positive or neutral outlooks. The key strengths highlighted include strong growth potential, favorable market dynamics, and efficient operations. However, concerns exist regarding valuation, market volatility, and regulatory risks.
Growth Drivers
Key catalysts that can propel ATGL’s future growth and share price:
- Rapid conversion of vehicles to CNG across new GAs
- Rising PNG connections from government’s push for cleaner fuel
- Margin expansion from high-margin industrial PNG volumes
- Potential for gas demand growth at 15% CAGR till 2030
Risk Analysis
Comprehensive Risk Analysis
Strengths: Strong growth potential, favorable market dynamics, efficient operations.
Weaknesses: Intense competition, volatile gas prices, high debt levels, dependence on imports.
Key Risks:
- Operational: Competition, gas price volatility, infrastructure development, safety & compliance.
- Financial: High debt, dependence on borrowings, forex fluctuations.
- Regulatory: Policy changes, taxation, tariff regulations.
- Environmental: Leakage & emissions, climate change, fossil fuel dependence.
- Other: Force majeure events, economic downturns, reputation management.
Mitigation: Diversification, hedging, robust risk management, sustainability focus, communication.
Strategies for Risk Mitigation
- ATGL has long-term gas supply agreements to mitigate volume risk. Further, its imports LNG to supplement domestic gas.
- The company is working on faster rollout of CNG stations and PNG connections across new GAs.
- ATGL is integrating green hydrogen production to reduce dependency on gas import/production.
- The company’s strong balance sheet allows it to absorb cost overruns to an extent. Further, long-term service contracts with vendors provide cost stability.
Conclusion
- ATGL is well-positioned to capture India’s enormous growth potential in gas demand, aided by its robust financial position, execution capabilities and strong parentage.
- The company’s expanding distribution network, surging volumes and high return ratios reinforce its investment appeal.
- ATGL is expected to deliver a CAGR of 25% in earnings over FY22-25E. Its stock price can potentially surge by 171% in 7 years.
- Investors can consider accumulating the stock on dips for healthy returns over a long-term horizon.
With India’s gas infrastructure space undergoing rapid evolution, it is vital for stakeholders to continuously monitor ATGL’s stock price trends as well as financial and operational performance to timely assess impact of market developments. This will enable informed decision-making regarding exposure to the company.
Credible Sources
- Financial Reports:
- Adani Total Gas Limited Annual Reports (https://www.adanigas.com/investors/investor-downloads)
- Quarterly Results and Presentations (https://www.adanigas.com/investors/investor-downloads)
- SEBI Filings
- Analyst Reports:
- Equitymaster Adani Total Gas Analysis (https://www.equitymaster.com/research-it/annual-results-analysis/ADGL/ADANI-TOTAL-GAS-2022-23-Annual-Report-Analysis/4725)
- ICICI Direct Adani Total Gas Research Report
- Motilal Oswal Adani Total Gas Research Report
- News Articles:
- The Economic Times – Adani Total Gas Q3 Results
- Livemint – Adani Total Gas aims to double CNG stations in next 3 years
- Reuters – Adani Total Gas sees FY24 volume growth of 8-10%
Disclaimer: This analysis of adani Port share price targets is for informational purposes only, not investment advice. I’m not a SEBI-authorized expert. Data and analysis are based on public info and AI tools, but may not be fully accurate or timely. Market conditions and company performance can change, leading to actual results differing from projections. Always do your own research and consult a qualified financial advisor before making any investment decisions