Adani Total Gas shares fall 81% in a month

Shares of Adani Total Gas have dropped 80.68% in just one month following Hindenburg Research's January 24 report which triggered a selloff in Adani Group stocks.

The Adani Total Gas stock hit another lower circuit on Friday by falling 5% to ₹751.80 apiece on the National Stock Exchange (NSE). The counter had hit its 52-week high of ₹4,000 on January 23, a day before U.S. short seller Hindenburg released its 100-page report on the Adani group.

Following the recent selloff, the city gas distribution company's market capitalisation (m-cap) has fallen to ₹82,683 crore.

This comes even as index provider MSCI said it will postpone the implementation of updates to weightings for two Adani Group companies – Adani Total Gas  and Adani Transmission – to May 2023 Index review. MSCI had earlier said that certain Adani Group investors should no longer be designated as free float. "MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology," the index operator said on February 8.

India's largest insurer Life Insurance Corporation of India (LIC) holds a 6% in Adani Total Gas.

The gas distribution company reported a consolidated net profit of ₹150 crore for the quarter ended December 2022, up 17% from ₹128 crore in the corresponding period last fiscal. Revenue from operations jumped 27% to ₹1,185 crore in Q3 FY23 compared with ₹932 crore in the year-ago period.

"While gas sector has been seeing volatility in prices due to geopolitical issues, we have seen a moderation in the international gas prices in the recent weeks. We are confident that this, coupled with the increase in domestic gas supply and expected increased allocation to the CGD sector, will drive increased demand across both PNG and CNG segments," said Suresh P Manglani, CEO of Adani Total Gas.

"Our balance sheet is healthy. We have a debt equity ratio at 0.4x and the net debt to EBITDA on an annualized basis is also healthy at 0.93x. Our return ratios are also quite healthy at about 20% and we hope to maintain and continue the similar ratios in future," Manglani said in the earnings call.

The Gautam Adani-led conglomerate last week said its businesses are generating consistent cash flows and there is no material refinancing risk. There is no near-term liquidity requirement as there is no significant debt maturity, the ports-to-energy conglomerate said in a credit note to calm jittery investors.

The Adani group's gross debt stood at ₹2.26 lakh crore ($27.7 billion) at the end of September 2022. Its cash balances increased to ₹31,646 crore in December from ₹29,754 crore in September.

The Ahmedabad-based conglomerate said it has a "strong asset base which has been built over three decades that supports the resilient critical infrastructure and guarantees best-in-class asset performance over the entire life cycle." The group's portfolio of assets stood at ₹3.71 lakh crore ($45.2 billion) as of September 2022.