Adani Gas Ltd: City gas!

(BSE Code: 542066) (CMP: Rs.111.35) (FV: Re.1)

Money Times - - Stock Buzz - By Subra­ma­nian Ma­hade­van

Adani Gas Ltd (AGL) be­long­ing to the renowned Adani group was listed on the bourses this month at around Rs.80/share post its de­merger from the par­ent com­pany Adani En­ter­prises Ltd (AEL). The de­merger was aimed at unlocking the value of AEL’s city gas distri­bu­tion (CGD) busi­ness in­clud­ing the piped nat­u­ral gas (PNG) busi­ness and en­able share­hold­ers to get di­rect ex­po­sure to the high growth CGD busi­ness by dis­pens­ing the hold­ing com­pany dis­count.

The pro­mot­ers hold 74.92% stake in AGL. AGL op­er­ates CGD net­works in Ahmed­abad and Vado­dara in Gu­jarat, Farid­abad in Haryana and Khurja in Ut­tar Pradesh cov­er­ing ~3,50,000 house­holds. It sup­plies CNG to over 2,00,000

ve­hi­cles. It has ob­tained rights to set up CGD net­works in 13 other cities in­de­pen­dently and an­other 16 through a joint ven­ture with state-owned In­dian Oil Cor­po­ra­tion (IOC). This makes it the largest listed pri­vate CGD player in In­dia with a pipe­line net­work of over 5,500 kms, 70+ CNG sta­tions and a client base of 4,50,000+. For FY18, it re­ported a top-line of Rs.1394 crore with EBITDA of Rs.374 crore. Cur­rently, there are 3 gov­ern­ment-owned listed CGD firms in In­dia - In­draprastha Gas Ltd, Ma­hana­gar Gas Ltd and Gu­jarat Gas Ltd. AGL’s fu­ture looks bright given the phe­nom­e­nal po­ten­tial of the CGD busi­ness in In­dia where the num­ber of play­ers is very low but the en­try bar­ri­ers in the in­dus­try are high.

The Adani group owns 25% stake in a 5 MMT (mil­lion met­ric tonne) LNG im­port ter­mi­nal at Mun­dra in Gu­jarat where it runs the coun­try’s big­gest port apart from a 5

MMT LNG im­port ter­mi­nal at its Dhamra port in Odisha and a 3.2 MMT LPG ter­mi­nal at Mun­dra. An­other 1.2 MMT

LPG ter­mi­nal at Dhamra is un­der con­struc­tion.

AGL is a solid do­mes­tic growth story. In­vestors can ac­cu­mu­late the stock at ev­ery de­cline since it has the po­ten­tial to touch Rs.200 in the next 2-4 years just like

Adani Trans­mis­sion. Its mar­ket cap stands at Rs.12246.39 crore.

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