Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adani Total Gas Ltd (BOM:542066, Financial) reported a 15% year-on-year increase in overall volume, driven by network expansion and increased consumption of PNG by commercial and industrial consumers.
- The company expanded its steel pipeline infrastructure to 12,516 inch-kilometers, enhancing its ability to deliver PNG and CNG to a broader customer base.
- Adani Total Gas Ltd (BOM:542066) increased its CNG network to 577 stations, with a focus on company-owned and dealer-operated formats, and is nearing 1,000 CNG stations in collaboration with JV partners.
- The company has significantly expanded its EV charging network to 1,486 points across 21 states and 213 cities, with plans to reach 3,000 charging points in the near future.
- Adani Total Gas Ltd (BOM:542066) secured USD 375 million in global financing to accelerate its network infrastructure development, marking the largest financing for a City Gas Distribution company in India.
Negative Points
- The company is facing a 16% reduction in APM gas allocation for CNG and PNG, which could impact pricing and supply.
- Despite the reduction in APM allocation, Adani Total Gas Ltd (BOM:542066) has not yet increased CNG prices, which may affect margins if not addressed.
- There is uncertainty regarding future APM gas allocation and pricing, which could impact long-term planning and cost management.
- The company is experiencing challenges in balancing operational costs and consumer pricing amidst fluctuating gas prices.
- Adani Total Gas Ltd (BOM:542066) is navigating potential policy shifts and market dynamics that could affect its gas sourcing strategy and overall business model.
Q & A Highlights
Q: With the recent reduction in APM gas allocation, why hasn't there been a price hike in CNG, and what is the long-term expectation for APM allocation in the CNG sector?
A: Suresh Manglani, CEO, explained that despite a 16% reduction in APM allocation, the company has not increased CNG prices yet. They are focusing on optimizing operational expenses and maintaining a balanced approach to protect consumer interests and support growth. The government continues to prioritize CNG and PNG for homes, and while there is a reduction due to field depletion, the company is closely monitoring developments and engaging with the government.
Q: What is the pricing mechanism for the new well gas being supplied to the CNG sector?
A: The new well gas is priced at a 20% premium to the average crude basket price, not the ceiling price. This pricing is based on the basket's average price, which changes monthly. The allocation is done for a six-month period, aggregating the demand from CGD entities.
Q: How does Adani Total Gas plan to manage potential high gas prices if crude oil prices rise significantly?
A: The company is confident that the government will intervene to protect end consumers if crude prices rise excessively. They are focusing on optimizing operational expenses and maintaining a diversified gas sourcing portfolio to manage costs effectively.
Q: What is the company's approach to capital allocation and growth in light of the new gas regime?
A: Parag Parikh, CFO, stated that there is no change in capital allocation for CGD infrastructure. The company will continue its planned investments in new geographical areas and also allocate capital to new businesses like LNG for transport, EV, and bioenergy.
Q: What is the current sourcing mix for CNG, and how does the company plan to address any shortfall in APM gas?
A: Rahul Bhatia, SVP, explained that about 48% of their gas is APM, with the rest being HPHT and RLNG. The company plans to replace any APM shortfall with new well intervention gas and HPHT, while also exploring competitive LNG contracts post-2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
