Adani Total Gas Shares Hit Upper Circuit In Declining Market: Here’s The Reason

Shares of Adani Total Gas Ltd (ATGL) rose sharply on Wednesday and hit the upper circuit, even as the broader market traded lower.

The stock moved higher after the government issued a notification on natural gas allocation, giving priority to essential sectors such as households and transport.

Supply Disruption Due To Global Developments

In a regulatory filing, Adani Total Gas said recent geopolitical tensions in the Middle East have affected gas supplies from some of its vendors.

Because of this, a few suppliers have reduced the volume of gas being delivered. The company said this has affected its ability to supply fuel to some industrial customers.

The update came at a time when energy markets are facing uncertainty due to global tensions and disruptions in supply chains.

Government Prioritises Gas For Key Sectors

Soon after the company’s disclosure, the government released a notification regarding the allocation of domestic natural gas.

The order states that gas will first be supplied to essential sectors. These include domestic piped natural gas (PNG) and compressed natural gas (CNG) used in transport.

Adani Total Gas is one of the companies that operates in the city gas distribution (CGD) segment and supplies PNG to homes and CNG to vehicles in several cities.

Under the revised allocation rules, certain segments will continue to receive full supply based on their previous consumption levels.

This includes domestic PNG connections, CNG for transport, LPG production, and pipeline operational needs such as compressor fuel.

Allocation For Other Industries

For sectors outside the priority list, the government has outlined lower allocation levels.

Industries such as tea manufacturing and other industrial users are expected to receive around 80% of their average gas consumption based on the past six months.

Fertiliser companies will receive roughly 70% of their average requirement, while oil refiners may get about 65% of their past consumption levels.

The government has also asked city gas distribution companies to ensure that industrial and commercial consumers receive at least 80% of their average gas usage over the past six months.

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Policy Move Lifts Investor Sentiment

Adani Total Gas said it supports the government’s decision to priorities gas supply for households and transport-related consumption.

The company added that it is working closely with government authorities and other stakeholders to manage the impact of the supply situation.

Investors appeared to respond positively to the policy move, which may help protect supply for the company’s core consumer segments. During Wednesday’s trading session, Adani Total Gas shares rose sharply (19.99%) to ₹566.90 apiece.

The momentum in shares continued on Thursday. During early trading, Adani Total Gas shares were selling at ₹635.75 apiece, up by nearly 12%.

Sources:

NDTV Profit

Economic Times