This Adani Group stock has zoomed over 3,600% since March 2020

Adani Total Gas hit a new high of Rs 2,845 on Tuesday, surging 15 per cent in the past three trading days

Shares of Adani Total Gas (ATGL) hit a new high of Rs 2,845 after they rallied 5 per cent on the BSE in Tuesday's intra-day trade, thus surging 15 per cent in the past three days. The stock has soared 43 per cent, from a level of Rs 1,989 hit on June 20, 2022, in just 16 trading days.

The stock on Monday had surpassed its previous high of Rs 2,739.95 touched in April 2022. In comparison, the S&P BSE Sensex was down 0.45 per cent at 54,152 points at 02:17 PM. The market price of ATGL has zoomed 3,610 per cent from a level of Rs 76.70 touched in March 2020.

TotalEnergies Holdings SAS, the world's second largest Liquid Natural Gas (LNG) private player, acquired 37.4 per cent of the equity capital of the Company in February 2020, becoming a co-Promoter. Following this transaction, the equity holding of Adani Total Gas Limited was held equally between the Adani Group and TotalEnergies.

ATGL is one of India's leading private players in developing City Gas Distribution (CGD) networks to supply Piped Natural Gas (PNG) to Industrial, Commercial, Domestic (residential) customers and Compressed Natural Gas (CNG) to the transport sector. Adani Total Gas enjoys a footprint in 33 geographical areas.

"With a progressively level playing field, where LPG subsidies are being removed and the government is limiting subsidized cylinders per household to 12 per year, a large PNG opportunity has emerged. ATGL is addressing this opportunity through enhanced footprint and gas pipeline grid across geographic areas. The Company is now licensed to offer services across the country, addressing nearly 10 per cent of India’s population," ATGL said in FY22 annual report.

The outlook is optimistic for the Indian economy in general and ATGL in particular. As India returned to buoyant growth (as witnessed in the last three quarters of the last financial year), ATGL continued to be the best placed within India’s city gas distribution sector to institutions: for being the lowest cost CGD proxy in a growing gas consuming nation. The Company possesses a low beta (capacity to resist declines in economic growth without Balance Sheet impairment) for a broadbased revenue mix comprising residential industrial, commercial and transportation consumers, the company said.

ATGL intends to establish 1500 electric vehicle charging stations (EVCs) in key urban markets in the first phase. ATGL is proactively ready with fast charging technology, digital platform (including customer interface and charging network management system) and a start-up mindset.

The Indian automotive industry is driving into 2022 with a positive mindset in its quest to reach pre-pandemic sales, having built a solid foundation in 2021 amid semiconductor shortage hampering production. The USD 118 billion auto industry is expected to become USD 300 billion by 2026, driving the demand for natural gas, the company said.

Meanwhile, ATGL's pricing strategy takes into account its own gas purchase cost, its margins and the need for its CNG and PNG to be competitive over alternative fuels. With rising domestic gas prices, ATGL has revised its CNG and PNG (domestic) prices upwards in the last few months; however, even with increased prices, CNG and PNG continue to remain competitive against alternative fuels. On a relative basis, CNG remains more competitive against automobile fuels, viz. petrol and diesel, compared to the competitiveness of PNG (domestic) against LPG, which is pegged down by the existing subsidy on it, ICRA said in a recent rating rationale.