Adani Total Gas Limited (ATGL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Adani Total Gas Limited Q2 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Pandita, Chief Executive Officer from Adani Total Gas Limited. Thank you, and over to you, sir.

Thank you, ma'am. Good morning, everyone. Good afternoon. A warm welcome to all our investors, analysts, fund representatives joining us today to discuss the results of Adani Total Gas Limited for the quarter and half year ended 30th September 2026. Let me take this opportunity to briefly share the current business operating environment. ATGL closed second quarter and half year with strong operational performance with Q2 FY '27 volumes growing 12% year-on-year to 315 MMSCM and EBITDA increasing 12% to INR 340 crores. For half year ended 30th September 2026, volumes grew 13% to 618 MMSCM and EBITDA rose 3% to INR 621 crores, reflecting a resilient execution despite a challenging global energy environment. Our growth continues to be supported by deeper market penetration and disciplined network expansion. In Q2 FY '27, CNG volume increased 17% year-on-year to 223 MMSCM while PNG volumes grew 3% to 92 MMSCM. Volume mix of new geographical areas improved to 41% from 35% in Q2 FY '26 on Y-o-Y basis. We added 16 new CNG stations during the quarter, taking the network to 623 CNG stations, connected 39,574 new household connections, taking PNG household connections to 11.81 lakhs, expanded our steel pipeline network to 16,305 inch-kilometers. We have seen a strong momentum in the industrial and commercial connections, added approximately 900 customers in H1 FY '27, taking that base to 10,864. That is approximately 1.4x the numbers added during the entire FY '26. Q2 FY '27 witnessed significant gas cost pressures with natural gas costs increasing 43% year-on-year amid higher Brent RNG prices, currency depreciation and change in the domestic gas availability. Through portfolio diversification, agile sourcing and calibrated pricing, we navigated these pressures while delivering 12% year-on-year EBITDA growth. Our capital allocation remains disciplined and focused on strengthening the core CGD network while scaling adjacent clean energy businesses. During HY FY '27, we expanded the steel network by 732 inch-kilometers, added 21 CNG stations and connected 77,870 new households. In e-mobility, we have installed 5,513 EV charging points across 26 states and union territories, covering 225 states with installed capacity of 63 megawatts. We continue balancing growth investments with financial discipline and long-term stakeholder value creation. Our performance demonstrates the resilience of our business model and strength of our execution. Q2 FY '27 revenue increased 34% year-on-year to INR 2,102 crores. EBITDA rose 12% year-on-year to INR 340 crores and PAT increased 3% year-on-year to INR 167 crores. For H1 FY '27, revenue grew 31% to INR 3,999 crores and EBITDA increased 3% to INR 621 crores. Our sustainability performance also improves with NSE Sustainability and SES score reaching 75 out of 100, reinforcing our commitment to governance, transparency and responsible growth. Along with our joint venture partner, IOAGPL, our Pan-India network reaches 1,185 CNG stations, 14.31 lakh PNG household connections, 12,925 industrial and commercial connections, which are connected with a strong pipeline network of 29,156 inch-kilometer. We are complementing this scale through new clean energy business. The integrated approach positions us to support India's energy transition and create sustainable long-term values. ATGL's performance this quarter demonstrates the true resilience of our business model, even as we navigate an incredibly challenging global energy landscape where a 43% year-on-year surge in natural gas costs was driven by higher Brent crude, domestic gas availability shifts and withdrawal of pooled gas support, we did not just hold our ground, we accelerated. By leveraging diversified sourcing and flexible procurement, we achieved a stellar 12% year-on-year increase in quarterly volumes to 315 MMSCM and matching 12% increase in EBITDA to INR 340 crores. We are successfully pivoting from traditional city gas distribution company into an integrated energy platform with 5,513 EV charging points active across 225 cities and rapidly growing footprint in cleaner fuels, we are proving that financial discipline, aggressive infrastructure expansion and India's green energy transition can go hand in hand. We remain deeply committed to deliver affordable, reliable and sustainable energy while creating secure long-term value for our shareholders, customers and communities. Thank you so much.

[Operator Instructions] The first questions is from the line of Vivekanand Subbaraman from AMBIT Capital.

Two questions. Number one is on the pricing front with respect to CNG. So what we see is that you have taken regular price hikes in important markets like Ahmedabad in June, July, August. Just to understand now from the perspective of pass-through of increased input costs to consumers, have you -- is that now taking care of your increased input costs such that you are back to the pre-war margin levels in markets where you have taken price hikes consistently till, let's say, August? Because here, the magnitude seems to be like around INR 11, INR 12 per kilogram. That is question one. Secondly, can you talk a little bit more about the sourcing and the gas availability, both domestic as well as your portfolio of contracts? And what is the current status there?

Yes, sure. Thank you so much for your question. On this CNG price revisions, while we don't pass on the entire cost to customers, we do take a calibrated approach. Whenever there is any pressure on the gas cost because of the current situation, whether it is war situation, whether it is the fluctuation in the crude or Brent or LNG prices, we do evaluate from time to time. And these markets like Ahmedabad, Faridabad, they are very important markets for us, and we do consider all the factors while passing on increase. Now in terms of the gas supply, we did a long-term contract, which has helped us to manage and not pass on the entire cost to the consumers. And we keep on exploring the gas supply scenarios given the current situations vis-a-vis our long-term growth, what we are projecting from time to time.

Can you quantify a little bit on what is the proportion of supply of APM this quarter versus previous quarter? Because you have given on the presentation, you have given 25% APM. Is that consistent across the quarter towards the end of the quarter also? Is there any more change? Just trying to understand if there is a further change in the allocation? And secondly, can you talk about the 75% other source, right? Can you elaborate a bit on how that 75% is decomposed.

Yes. There is slight reduction in the APM and there are other domestic gases also, which keeps on fluctuating, right? We have something called new well gas. We have something called HPHT gases, which keep on fluctuating from time to time. Our -- out of this 75 portfolio, close to around 40% of the portfolio is on spot basis. So we keep on evaluating basis what is happening on the global scenario and Indian context right now. That is how do we evaluate from time to time.

[Operator Instructions] The next question is from the line of Arya Patel from Emkay Global.

Congrats on a good set of numbers. So just continuing to the last question, can you give us a percentage breakdown or sourcing mix as to 25% was APM? And what percentage was NWG, HPHT spot and the long-term contracts, so whether it was HH or [indiscernible] that is my first question. And second -- I'm sorry, I'll continue with the second question as well. So second question was on -- so you've mentioned that after the pooled gas mechanism was removed, the government has come up with some additional sourcing or supply of HPHT for CGD. Can you throw some further light on that? Those are my 2 questions.

Out of this 70%, around 40% is linked to various markers like Henry Hub, like Brent-linked contracts, which includes spot also. That is the answer to your first. On HPHT, it keeps on varying. While government is supporting us in terms of offering that gas to CGD sector, that keeps on varying depending upon the production cycle for HPHT because it is a high-pressure, high-temperature gas well where production fluctuates from time to time. So basis that, they calibrate and accordingly allocate the gas volumes to all the CGS sectors. And we also get that volume, and it keeps varying from month-to-month, fortnight to fortnight. And variation is to the tune of 50% to 1% in that range.

The next question is from the line of Varatharajan Sivasankaran from Antique Limited.

Two questions. One on the number of outlets you are adding and what is the visibility for the next 2 quarters and probably like if you can give some idea in FY '28 as well, what is the kind of number you are looking at? Secondly, overall CapEx, like what is the number in the current year and next year? And what is it going towards primarily? Is it pipelines or more like outlets or any kind of other infrastructure you're looking at?

So our CNG stations, last year, we added some 68 CNG stations. This time, we are targeting close to 80 to 90 CNG stations. We are very much into our execution plan in terms of investment and in terms of all the procurement activities. That's very well on target side. For '28, we are looking for similar kind of numbers. with a calibrated approach in terms of which are the volume-driven growth areas, which are the new virgin areas where we need to focus and which are under conventional GAs. So we do evaluate that and based on that, we will take a decision for 2028. But more or less, it will be in the similar or more aggressive manner, which is under discussion stage for next year planning. Then on CapEx part, we do -- are aggressively focused on CapEx or the expansion part of it. As you must have seen our Q2 performance in terms of number of households. We are almost 70,000 households have been connected in H1. Our industrial connections and commercial connections has also almost doubled. Then our CNG stations, almost 21 CNG stations added. So we are aggressively working on our growth, infrastructure development also across all our GAs.

Yes. Any number in terms of [ repeat ] crores, sir, what is the current outlay and next year outlay?