Adani gas share analysis | Adani gas share news | Fundamental analysis of stocks - YouTube

Hi, I am Gunjan Grover.

Today we will talk about the biggest privately owned city gas distributor in India present in Gujarat, Haryana, and Uttar Pradesh.

Yes, today we will be covering Adani Total Gas.

We will be discussing About the company, Company overview & its operating segments,

Industry overview, Financials, Strengths & weaknesses, The way ahead.

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First, let's about the company.

Adani Gas was founded in 2005.

It is part of the Adani Group

It was the only 3rd business group from India to have crossed the $100 billion market cap milestone after the Reliance and Tata Groups.

The Adani Group is a multinational corporation with interests in a lot of business areas

including food processing, airports, solar energy, power, transmission, ports, gas distribution, and many others.

Adani Total Gas is a city gas distribution company

It serves industrial and residential customers in India through PNG (piped natural gas) connections and CNG (compressed natural gas) stations.

The company was operating as Adani Gas in the past

Now converted into a joint venture between Adani Group and Total Energies of France which is the 2nd largest LNG company in the world.

Total Energy of France bought a 37.4% stake in the company in 2019, and the company was renamed Adani Total Gas.

Now let's talk about the Company Overview & Its Operating Segments.

Adani Total Gas has a direct presence in 19 geographic areas

Out of which 13 GAs were awarded in the 9th CGD bidding round and 2 GAs were awarded in the 10th round.

The company had 4 GAs from the start in Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana, and Khurja in Uttar Pradesh.

The 19 new GAs are located in Gujarat, Haryana, Karnataka, Tamil Nadu, Rajasthan, Madhya Pradesh, Uttar Pradesh, Chattisgarh, and Odisha.

The company also operates CGD networks in 19 GAs through its JV with Indian Oil.

They are in Uttar Pradesh, Punjab, Haryana, Kerala, Uttarakhand, Karnataka, Goa, Bihar, West Bengal, and Daman

As of FY21, the company has 217 CNG stations.

Its total network is 8000+ kilometers.

It has served 1666 industrial, 3300 commercials & 4.8 lakh residential customers.

By including JV with Indian oil, the company has covered 8% of the Indian population.

The company has 4 main operating segments.

First we will talk about Residential PNG.

In this segment, the company provides metered connections to residential users for using PNG for cooking and water heating.

This segment has seen households covered more than double of 2.2 Lacs in FY16 to 4.8 Lacs in FY21.

PNG has several advantages over LPG like:

Easy to use Much safer than LPG cylinders

Lower costs than LPG (without subsidies) Uninterrupted supply

Cleaner fuel source vs LPG

The ease of usage of piped gas over LPG cylinders

With the govt’s long-term initiative to replace the LPG system in India with Piped Natural Gas, the segment will grow.

Second is Commercial PNG.

Under this segment, the company provides PNG to commercial customers in the hospitality and food sectors.

Its customers include restaurants, healthcare facilities, and corporate offices.

The same advantages identified earlier apply to this segment as well, so it is expected to rise in demand for this segment.

Forth is Industrial PNG.

Here the company sells PNG to industrial customers for use as fuel in

boilers, thermic fluid heaters, direct-fired dryers, textile processing, heat treatment, wire drawing, casting, and forging applications.

The company is looking to leverage its gas pipeline networks to establish gas corridors for its industrial customers

It is to offer these customers specific advantages like:

Uninterrupted supply

Reduced Emissions & Lower Carbon Scores

Cheaper fuel source than other industrial sources

The 3 PNG segments accounted for 57% of revenues from operations in FY21 with sales of over Rs 1000 Cr.

In this year, the company recorded 77% volume distribution in the industrial PNG segment.

20% in Residential PNG and 3% in Commercial PNG.

The last segment is CNG.

This is the biggest operating segment for the company.

Under this, the company builds and runs CNG retail outlets to provide CNG to retail customers for use as a transportation fuel.

The company has seen very rapid growth in this segment in recent years

The number of outlets rose to 217 in FY21 from only 82 in FY19.

The demand in this segment is expected to rise fast as CNG is the biggest transport fuel source after petroleum products

It is widely expected to act as the bridge to electrification in the future.

CNG vehicles have also been growing at a high CAGR of 9% despite the overall auto industry slowdown,

highlighting the resilience and rising demand for CNG and CNG vehicles.

The CNG segment accounted for 41% of revenue from operations in FY21.

The segment saw volumes of 227.18 Million Metric Standard Cubic (MMSCM) in FY21.

Now let's talk about the joint venture of Adani Gas with Indian Oil.

This is the 50-50 JV formed with Indian Oil for city gas distribution in 19 GAs.

The JV saw sales of Rs 354 Cr in FY21 with EBITDA of Rs 74 Cr and sales volumes of 111.38 MMSCM.

Now let's talk about the Industry Overview.

The Petroleum & Natural Gas Regulatory Board of India expects the demand for natural gas to grow at a CAGR of 6.8%

City Gas Distribution has risen with a CAGR of 18.8% from 2016 to 2020.

CGD demand is expected to stay on the rise as the country is looking to phase out LPG as a cooking source

As a good short-term alternative for petrol while the auto sector goes through electrification.

The current consumption of natural gas in India is currently 6% of energy requirements

The Govt of India is targeting to take this up to 15% by 2024.

It has also planned the setup of a National Gas Grid for pan India transport of natural gas.

The major drivers for the sustained rise in demand for both CNG and PNG are:

1. Rising urbanization and auto industry

2. Preference of CNG as petrol and diesel substitute (for both individual and public transport)

3. Rising prices of LPG

4. Competitive advantages over LPG like safety, convenience, and cost-effectiveness

5. Cleaner fuel source than petroleum products

Now let's discuss the financials of Adani Gas and its competitors.

The market cap of Adani Total Gas is 1,92,585 crores.

1 Year Returns is 363%

5 Year Sales CAGR is 8.48%

Operating Profit Margin is 38.5%

Net Profit Margin is 28.4%

Debt to Equity is 0.3

Return on Equity is 28.1%

Price to Earnings is 326 Price to Book is 86.3

Current Ratio is 0.26

Now let's talk about the Strengths.

The biggest strength of the company is its association with Total Energies.

Total is the 2nd largest private LNG company in the world

It has a presence across all energy sectors including renewable and emerging ones like hydrogen and biomass.

ATG’s association with Total not only provides it with access to technological advantages,

but it also provides a similar reach for other energy companies in the Adani Group Companies.

Being the largest private-sector CGD company in India, the company has a big advantage in terms of branding and customer reach

as compared to other players like IGL, Gujarat Gas who are mostly backed by govt companies.

The natural gas industry is expected to see a sustained rise in the future due to multiple long-term drivers

As the biggest private player in the sector, ATG is expected to be at the forefront of this fast-rising industry.

Now let's talk about the Weaknesses.

The CNG industry may have good demand due to its potential as a substitute for petrol and diesel,

but the future of transportation and the auto sectors is set to be electric.

Thus, there are big concerns over the future of this commodity as a long-term transport fuel source and the threat from electrification.

CGD operations are restricted by GAs which are awarded through a tender process

These GAs will become open for competition on the completion of the marketing exclusivity period.

The CNG sector also faces the threat from alternative fuel sources like ethanol as it is enjoying extensive policy support from the Indian Govt.

This may dampen the viability of CNG as a big fuel source for transportation.

Now let's talk about The Way Ahead.

With a large scope for expansion due to phasing out of LPG, rise in the industrial use of PNG as a fuel source, and the rise in CNG vehicles.

The future for the natural gas industry remains bright

There is vast room for market expansion for the industry especially in the CGD segment

Here the switch from LPG to PNG is already seen as a next step for the cooking fuel sector.

Although there may remain doubts on the long-term viability of CNG as a transport fuel,

the industrial & power sectors have resilient runway for PNG due to phasing out of oil and coal power and the advantages of natural gas.

As the biggest private player in the industry and the association with a global natural gas player,

Adani Total Gas has all the ingredients to form a winning recipe for the gas sector and remain at the forefront of the industry in the future.

We hope you found this video helpful. If yes then don't forget to like and subscribe.

We don't recommend any stock and all of this is for educational purposes.

On that note, here's me Gunjan Grover. Signing off.

Bye-bye. Take care. Keep calm and Invest on.