Adani Total Gas Ltd (NSE: ATGL) is one of India’s leading city gas distribution companies. A joint venture between Adani Group and TotalEnergies of France, ATGL supplies PNG (Piped Natural Gas) and CNG (Compressed Natural Gas) to households, industries, and transport sectors.
Let’s dive deep into its fundamentals:
1️⃣ Financial Statements Analysis
✅ Revenue Growth
- FY24 Revenue: ₹4,356 crore, up from ₹4,683 crore in FY23 (approx. -7% YoY decline) due to lower gas prices and volume pressure.
- Quarterly revenue for Q4 FY24 stood at ₹1,088 crore vs ₹1,269 crore in Q4 FY23, indicating a drop of ~14.2% QoQ.
✅ Profitability Metrics
- Gross Margin: Approx. 50.3% in FY24
- Operating Margin: ~23.5%
- Net Profit Margin: 12.5% (FY24 net profit ₹544 crore) – slight dip due to margin pressure in the CNG segment
✅ Earnings Per Share (EPS)
- FY24 EPS: ₹4.94 per share vs ₹5.38 in FY23
- EPS has seen marginal decline YoY. Future projections depend on expansion in newer geographies and volume growth.
✅ Debt Levels
- Debt-to-Equity Ratio: 0.23 (conservative leverage structure)
- Interest Coverage Ratio: 10.5x – reflects strong ability to meet interest obligations.
✅ Cash Flow Analysis
- Operating Cash Flow: ₹702 crore (FY24), up from ₹605 crore in FY23
- Free Cash Flow: Healthy positive trend, despite capex for city gas expansion
2️⃣ Valuation Metrics
📈 Price-to-Earnings (P/E) Ratio
- P/E (TTM): ~147x – significantly higher than industry average (~25x), indicating a premium valuation
📈 Price-to-Book (P/B) Ratio
- P/B: ~26.5x – signals rich valuation relative to book value
📈 Enterprise Value-to-EBITDA (EV/EBITDA)
- EV/EBITDA: ~80x – very high, driven by growth expectations and scarcity premium in the sector
📈 Dividend Yield
- Dividend: Nil. ATGL does not currently offer dividends, reinvesting profits into expansion projects.
3️⃣ Growth Potential & Competitive Positioning
🚀 Industry Trends
- India’s natural gas consumption is expected to grow at a CAGR of 6–7% by 2030. Government aims to raise gas share in energy mix to 15% from 6%.
🏆 Competitive Advantage
- Presence in over 30 geographical areas; strong parentage (Adani & TotalEnergies) ensures technology and capital support.
💡 Innovation & R&D
- Investment in LNG stations and e-mobility solutions; R&D in smart metering and energy management.
👨💼 Management & Leadership
- CEO Suresh P Manglani leads with over 30 years’ energy sector experience. Backed by the Adani Group’s strategic planning and Total’s technical edge.
4️⃣ Risk Analysis
⚠️ Market Risks
- Susceptible to volatility in LNG prices
- Macroeconomic risks: Inflation, regulatory changes in gas pricing
⚠️ Operational Risks
- Execution delays in new GAs
- Regulatory hurdles in approvals for CGD networks
⚠️ Debt & Liquidity Risks
- Moderate debt; ample liquidity. However, aggressive capex plans may increase leverage in future.
5️⃣ Recent News & Catalysts
📊 Latest Earnings Report (Q4 FY24)
- Net profit ₹135 crore vs ₹150 crore YoY – marginal dip, attributed to lower CNG demand
- Revenue down 14% QoQ due to lower volumes and prices
🤝 Mergers & Partnerships
- Partnering with Flipkart and Amazon for green logistics
- Exploring green hydrogen and e-mobility expansion projects
🎯 Conclusion: Is Adani Total Gas a Good Investment?
✅ Strengths:
- Strong brand, robust gas infrastructure, government push for clean energy
- Low debt, high return on capital employed (ROCE ~16%)
❌ Weaknesses:
- Overvalued on traditional metrics
- Dependent on policy, regulatory clearances, and LNG imports
🧠 Investor Verdict:
Adani Total Gas remains a growth story in India’s energy transition. However, the stock trades at a steep premium. Long-term investors must evaluate growth potential vs valuation risk carefully.
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