Adani Gas hits new high; stock zooms 408% from March 2020 low

Analysts at ICICI Securities have a positive outlook on the stock from a long term perspective as Adani Gas is well poised to benefit from India's growing CGD sector.

Shares of Adani Gas hit a new high of Rs 390, up 4 per cent on the BSE in intra-day trade on Wednesday in otherwise range-bound market. The stock of Adani Group integrated oil & gas company surpassed its previous high of Rs 382.50 touched on December 3, 2020. In comparison, the S&P BSE Sensex was up 0.04 per cent at 47,633 levels at 10:58 am.

In the past three months, Adani Gas has zoomed 106 per cent, as compared to 25 per cent rise in the S&P BSE Sensex during the same period. The stock has skyrocketed 408 per cent from March low of Rs 76.70 on the BSE.

Adani Gas on November 6 announced a strategic collaboration with Italy-based Snam, Europe’s leading gas infrastructure company. Further, a non-binding agreement was signed between Snam and Adani Gas [a joint venture company of Adani Group and Total of France] to create a JV for setting-up a compressed natural gas (CNG) compressors manufacturing facility in India.

This would help in promoting the development of refueling infrastructure for sustainable mobility and fostering the use of natural gas, as envisioned by the Government of India, reports suggest. Consequent to induction of TOTAL Holdings SAS as joint promoter of the company, the board has approved change of company name from Adani Gas to Adani Total Gas.

Adani Gas 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. In November, the company has signed a definitive agreement for the acquisition of the business undertaking pertaining to city gas distribution and retail sale of CNG that is being undertaken in geographical areas of Jalandhar, Ludhiana, and Kutch (East).

Analysts at ICICI Securities have a positive outlook on the stock from a long-term perspective. The company, they believe, is well poised to benefit from India’s growing CGD sector.

"The continued strong capex in existing, new GAs along with favourable regulatory scenario is expected to lead to long term stable volume growth. With lower domestic gas & global LNG prices, the company is comfortably placed on margins front and also enjoys competitive advantage against other fuels. Its plan to develop integrated CGD model and auto fuel retailing under the JV Total Adani fuels marketing will also lead to creation of long term shareholder value," the brokerage said.