Adani Gas hits new high after ICRA upgrades Co's rating with stable outlook

Shares of Adani Gas hit an all-time high of Rs 201 on the BSE in intra-day trade on Friday after the company said rating agency ICRA has upgraded its long-term rating and re-affirmed the short-term rating with a stable outlook.

The stock of Adani Group bounced back 9 per cent from its early morning low of Rs 183 on the BSE. In the past one month, it outperformed the market by surging 23 per cent against a 2 per cent rise in the S&P BSE Sensex.

In the April-June quarter (Q1FY21), despite continued Covid-19 impact, Adani Gas achieved a combined volume of compressed natural gas (CNG) and piped natural gas (PNG) at 64 million MMSCM against 137 MMCM in Q1FY20. The volume in June’20 was at 0.71 MMSCMD compared to the volume in April’20 at 0.35 MMSCMD showing a significant volume recovery trend, the company had said while announcing its Q1 results.

ICRA in the rating rationale said that the rating upgrade for Adani Gas (AGL) takes into consideration the completion of the acquisition of 37.4 per cent stake in AGL by Total Holdings SAS (Total), a 100 per cent subsidiary of Total SA, following which Total has been classified as a co-promoter of AGL.

ICRA expects the operational synergies from this transaction to be significant over the long-term. Total SA being among the leading liquefied natural gas (LNG) players in the world, AGL should benefit from a favourable long-term LNG sourcing tie-up for its operations.

Moreover, with Total being an equal shareholder as the Adani Group after this transaction, the equity requirement for the newly awarded 15 geographical areas (GAs) in the city gas distribution (CGD) bid round 9 and 10 will be contributed equally by both these promoter groups. ICRA believes that Total’s strong credit profile (Moody’s Aa3 (Negative)/P1) coupled with Adani Group’s financial flexibility lends considerable support to AGL in terms of its ability to raise capital to meet the capex funding requirements, it said.

At 11:25 am, the stock was trading 2.5 per cent higher at Rs 195 on the BSE, as compared to a 1.2 per cent fall in the S&P BSE Sensex. A combined 5.93 million equity shares have changed hands on the counter on the NSE and BSE so far.