Adani Gas - Q2FY21 Company Update - ICICI Direct

Adani Gas' (AGL) operating revenues fell 12.3% YoY to Rs. 441.2 crore in Q2FY21 due to a drop in CNG and commercial PNG sales volume. However, revenues recovered sharply 113.6% QoQ as sales volume doubled QoQ. Total sales volume came in at 1.4 mmscmd, down 10.3% YoY, up 102.5% QoQ. EBITDA for the quarter increased 54.3% YoY to Rs. 209.5 crore. Gross margins were strong at Rs. 19.9/scm, up Rs. 6.8/scm YoY due to lower gas prices. EBITDA/scm was at Rs. 16/scm, Rs. 6.7/scm higher YoY. Reported PAT was at Rs. 135.7 crore, up 12.7% YoY.

Valuation & Outlook

AGL's sales volume reached pre-Covid level of 1.6 mmscmd by September end with full recovery in industrial PNG segment. 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. We have a positive outlook on the stock from a long term perspective as AGL is well poised to benefit from India's growing CGD sector. However, due to sharp run-up in stock price, we change our rating from BUY to HOLD with a revised target price of Rs. 230.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AdaniGas_CoUpdate_Nov20.pdf

Source : Equity Bulls

Keywords