Adani Total Gas Experiences 17% Drop in Net Profit Amid APM Gas Supply Reductions

Adani Total Gas Ltd, a collaboration between Adani Group and TotalEnergies of France, reported a 17% decline in net profit for the third quarter. The decrease was due to replacing cheaper domestic gas with more expensive alternatives. The net profit for October-December stood at Rs 143 crore, down from Rs 172 crore in the same period last year.

Representative image

The company faced challenges as regulated gas supplies, known as APM gas, met only 47% of the demand for the CNG segment. The shortfall was compensated with higher-priced gas. Despite this, ATGL aimed to maintain volume growth by carefully managing the increased gas costs, which affected profitability.

Impact of Reduced APM Gas Allocation

In October and November of the previous year, the government reduced APM gas supplies to city gas retailers due to limited domestic production. This affected retailers who supply CNG to vehicles and piped cooking gas to homes. Although some supplies were restored recently, the cost of natural gas rose by 20% due to lower APM allocation and higher imported gas prices during winter.

The company's EBITDA suffered a 10% year-on-year decline, reaching Rs 272 crore due to increased gas costs. Profit before and after tax also fell by 17%, attributed to higher depreciation from an expanding asset base. Despite these challenges, ATGL expanded its CNG stations to 605 with 28 new additions.

Growth in Connections and Sales

Piped natural gas home connections grew by 28,677, reaching a total of 9.22 lakh. Industrial and commercial connections also increased to 8,913 with the addition of 167 new consumers. The company recorded a 15% increase in CNG and piped natural gas sales, totalling 257 million standard cubic meters in Q3.

The reduction in APM allocation for CNG impacted profitability as ATGL had to purchase more expensive natural gas to ensure uninterrupted supply. The allocation for ATGL's CNG segment was reduced from 63% to 51% on October 16, 2024, and further decreased to 37% on November 16, 2024.

Future Outlook with Increased APM Allocation

Considering these reductions, the average supply of APM-based natural gas for the CNG segment during the quarter was at 47%. However, from January 16, 2025, the APM allocation for CNG increased from 37% to 51%. This change is expected to positively impact the company's performance in the next quarter.

ATGL remains focused on balancing cost management while ensuring growth in its operations. The recent increase in APM allocation is anticipated to alleviate some financial pressures and support future profitability.