Adani Total Gas (NSE:ATGL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Adani Total Gas Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 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 09/30/2026.

0:54 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 'twenty seven volumes growing 12% year on year to three fifteen MMScm and EBITDA increasing 12% to INR $3.40 crores. For half year ended 09/30/2026, volumes grew 13% to six eighteen MMScm and EBITDA rose 3% to INR $6.21 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.

1:44 In Q2 FY twenty seventeen, CNG volume increased 17% year on year to two twenty three MMScm, while PNG volumes grew 3% to 92 MMScm. Volume mix of new geographical areas improved to 41% from 35% in Q2 FY 'twenty six on year on year basis. We added 16 new CNG stations during the quarter, taking the network to six twenty three CNG stations, connected 39,574 new household connections, taking PNG household connections to 11.81 lakhs, expanded our steel pipeline network to 16,305 each kilometers.

2:31 We have seen a strong momentum in the industrial and commercial connections, added approximately 900 customers in H1 FY twenty twenty seven. Taking that base to ten thousand eight and sixty four, that is approximately 1.4 times the numbers added during the entire FY twenty twenty six. Q2 FY twenty twenty seven 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.

3:24 Our capital allocation remains disciplined and focused on strengthening the core CGD network while scaling adjacent clean energy businesses. During HY F1 twenty seven, we expanded the steel network by seven thirty two inches kilometers, added 21 CNG stations and connected 77,817 new households. In e mobility, we have installed 5,513 EV charging points across 26 states and union territories, covering two twenty five states with installed capacity of 63 megawatt. 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.

4:16 Q2 FY twenty twenty seven revenue increased 34% year on year to INR 2,102 crores, EBITDA rose 12% year on year to INR $3.40 crores and PAT increased 3% year on year to INR 167 crores. For H1 FY twenty twenty seven, revenue grew 31% to INR 3,999 crores and EBITDA increased 3% to INR $6.21 crores. Our sustainability performance also improved with NSE sustainability and SCS score reaching 75 out of 100, reinforcing our commitment to governance, transparency and responsible growth. Along with our joint venture partner, IOAGPL, our pan Indian network reaches eleven eighty five CNG stations, 14.31 lakh P and G household connections, 12,925 industrial and commercial connections, which are connected with a strong pipeline network of 29,156 inches kilometer.

5:23 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 three fifteen MMSEM and matching 12% increase in EBITDA to INR $3.40 crores.

6:16 We are successfully pivoting from traditional city gas distribution company into an integrated energy platform with 5,513 EV charging points active across two twenty five cities and rapidly growing footprint in cleaner fuels. We are proving their 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. Thank you very much. We will now begin the question and answer session. The first question is from the line of Vivekanand Subaraman from Ambit Capital.

7:39 Two questions. Number one is on the pricing stance with respect to CNG. So what we see is that you have taken regular price hikes in in important markets like 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 reward 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 11, INR 12 per kilogram.

8:32 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? Thank you. Yeah. Sure. Thank you so much for your question. You know, on this CNG price revisions, while while we don't pass on the entire cost to customers, we do take 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.

9:20 And and these markets like Ahmedabad, Faridabad, 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, you know, manage and not pass on the entire cost to the consumers. And we keep on exploring the gas supply scenarios, you know, given the current situations with always our long term growth, what we are projecting from time to time. Yeah. Thank you. Thanks for the response. 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.

10:12 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 how that 75% is decomposed? Thank you. Yeah. There is slight reduction in the APM and there are other, you know, domestic gases also, which keeps on fluctuating. Right? We have something called New Well Gas. We have something called, you know, HDHP gases. We keep on fluctuating from time to time. Our out of this 75 portfolio closed around 40% of the portfolio is on spot basis. So we keep on evaluating basis what is happening on the global scenario and in Indian context right now. That is how do we evaluate from time to time.

11:09 Okay. Thank you, and all the best. Thank you. Ladies and gentlemen, to ask a question, please press star and 1. Participants to ask a question, please press star and one now. Anyone who wishes to ask a question, please press star and 1. The next question is from the line of Adani Patel from MT Global. Yes. Thank you for the opportunity, and congrats on a good setup number.

11:58 So just continuing to the last question, can you give us a percentage breakdown or, you know, sourcing mix as to 25% plus ATM? And what percentage was NWT, HDHP, spot and the long term contract so whether it was or that is my first question and second I'm sorry I'll continue with the second question as well. So second question is on, so you've mentioned that after the food gas mechanism was removed, the government has come up with some additional sourcing or supply of HDHP for CGD. Can you throw some further light on that? Thank you. Those are my two questions. You know, out of this 70%, around 40% is linked to, you know, various markers like Henry Hub, like Brent linked contracts, which includes spot also. That is the answer to your first.

12:56 On HDHP, you know, it keeps on waiting. While government is supporting us in terms of offering that gas to CGD sector, That keeps on waiting depending upon the, you know, production cycles for HDHP 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 cities sectors. And and we also get that volume, and it keeps waiting from month to month, fortnight to fortnight. Yeah. And variation is to the tune of, you know, 50% to 50% to 1%. I'm in that range. Yeah. Got it. Those are my questions. Thank you for that. That's all. Thank you, mister Adani.

13:47 Thank you. The next question is from the line of Arthadajan Shivashankaran from Antique Limited. Please go ahead. Thanks for the opportunity, sir. Two questions. One, on the number of outlets you are adding and what is the visibility for the next two quarters? And probably, like, you should give some idea in FY 'twenty eight as well, what is the kind of number you are looking at? Secondly, overall CapEx, like what is the numbers 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 we're looking at? So our CNG stations, you know, 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, you know, execution plan in terms of investment and in terms of all the procurement activities.

14:46 That's very well on target side. For '28, we are looking for similar kind of, you know, numbers with a with a calibrated approach in terms of which are the volume driven growth areas, which are the new version areas where we need to focus and which are under conventional GAs. So we do evaluate that and basis 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, you know, are aggressively focused on CapEx or the expansion part of it. As you must have seen our q two performance in terms of number of households, we are almost 70,000 households have been connected in h one. Our industrial connections and commercial connections are also almost doubled. Then our CNG stations, almost 21 CNG stations added.

15:49 So so we are aggressively working on our growth infrastructure development also in all... Across all our GAs. Yeah. Any number in terms of repeat process? What is the current outlay and next year outlay? So so this year, we are talking about close to around close to around 70,000 households have been connected in H 1. 900 new commercial and industries have been connected, and 21 CNG stations have been added in H 1. And there is a construction of around 70 CNG stations right now, which is under advanced stage where the equipment procurement has already been started.

16:38 Pipeline lane work is already going on. So for next year, we are looking for similar kind of, you know, growth prospects for infrastructure expansion. Okay. Thank you. Thank you. The next question is from the line of Shreedhar Chandran from Presid Capital. Congratulations, sir, for the solid numbers. So I have two questions. The first question on EBITDA margin category and the cash allocation. So if you take three, four years back, so let's say, the margin was above over 23%. So whereas q two f five twenty seven is approximately around the 16.2.

17:28 So even the revenue grew by 34% this quarter, but EBITDA increased only up to 12% and that is just 3%. If geopolitical disruption is and domestic cash allocation approach, can it can it is realistically return to historical margin levels? And what specific measures within management control? And what timeline would be required to achieve this recovery? This is my first question. And the second question on EV charging expansion. So if I could remember in 2023, so when the channel was announced, so the target to install 72,008 charging stations by 2030.

18:15 So based on the presentations, so I could see only until now, five thousand five thirteen charging points were installed. And so and, operationally, around four, eight, zero, nine. And what utilization levels are currently being achieved and now much additional capital investment is structured to reach the target. And when this management expert, will be charging for making a meaningful contribution to return on the returns? This was my two questions. Sure. Sure, sir. On your first question, the EBITDA margin pressure. So if you see our sales growth, which is very much within our control in terms of the expansion which we are doing versus how we are getting the returns by adding the new stations and adding new volumes.

19:07 So CNG volumes, industrial volumes, all the volumes are growing and most of them are in double digits. So we are very much what is happening in industry is growing at around 20%. We are very close to growing at 70% to 18% in CNG. So that is within our control. Now these temporary issues, whether it is West Asia crisis, whether it is volatility in the brand or all other markers, so these are temporary in nature. So that is why we are engaging into, you know, getting into long term contracts. We are where we see it makes sense for us to have better EBITDA margins. And we try to, you know, calibrate it from time to time in terms of managing our OpEx, CapEx, then other such issues which can help us to maintain or achieve higher EBITDA margins.

19:58 So that is how we work on EBITDA as well as volume growth. That is question number one. On question number two on the EV growth, right, one of the major as an industry concern is in terms of the utilization of the EV chargers. So our key focus right now is to increase our penetration on b to b charging infrastructure and increase the utilization level. So we have tied up multiple b to b customers including our group captive like Adani Cement, like Adani Post, Adani Logistics, where we will be we will be building the infrastructure for charging all these trucks, which will be playing on certain routes. So that will give us more, you know, revenue and higher utilization compared to what is happening in the b to c. So that is how we are evaluating that on the EV side.

20:57 Thank you so much. Okay. Thank you. The next question is from the line of Vivekanand Subraman from Ambit Capital. I want you to discuss a bit more on the CBG business and your plans in that and and how the recently announced Coverson scheme will have a play there. So one, in terms of the expansion that you are planning there and also in terms of the economics as much as you can talk about it, that will be very helpful. Thank you.

21:54 Yeah. Sure. See, if you see CBG as a country perspective, it is one of the best schemes which government has come. You know, if you see, we as a country, you know, one was to show and demonstrate the resilience during that crisis or the war times, which India and as an industry has demonstrated that. Now we are at a stage where we need to be, you know, self sufficient. That is so called. Right? We need to focus on developing or generating our our energy. So biogas is one of such initiatives from the government. Now with respect to ATGL, you know, few of the challenges are with respect to feedstock availability or right kind of feedstock availability and then the technology.

22:41 We have developed one CPG plant. We are into expansion of that existing CPG plant. Currently, we are producing around five to six tons, which we are taking it to double in next five to six months. Investment is already being committed and even the technology type has already been taken care. So we are working towards that. In addition to that, we have few more projects in pipeline, but we are evaluating that and taking slightly lower steps in terms of the growth prospect to as soon as we have a visibility and with confidence on the technology and the feedstock, we will certainly be keen to move forward and develop those... That vertical as a whole in a business perspective. That's how we are working towards CVG part.

23:27 Thank you. Okay. Sir, can you elaborate a bit on these two aspects, the technology tie ups? What are the major feedstock areas that you're looking at in specific geographies of focus? I believe you have the big operational facility for you, think, is in UP, right, Balsana. Right? So where where are you expanding this business, and who are the technical partners here? What are the challenges? And secondly, what are the feedstocks that you're working on? If you can elaborate on this, that would be great. Thank you. Currently, it is cow dung. It's a mix of cow dung and paddy straw in Varsana, and our partner over there is Thermax.

24:13 Okay. And with respect to, you know, other feedstocks, we keep on evaluating. It is like, you know, starting from energy plantation that is energy plantation and then the mix of multiple fields. It can be multiple ways. It can be credit straw. It can be agricultural waste or chicken litter. It is it is different parts, different. And overall value chain, availability of land, availability of feedstock, availability of selling this product, whether it's bio manure and biogas. So you have to evaluate all the things in parallel because huge requirement of land, huge requirement of feedstock, huge requirement of setting the plant. All the line items has to take mark in terms of making a sensible decision for that part.

25:01 So that is where we keep on evaluating that. Yeah. Thank you. Understood. Thank you very much and all the latest. Thank you. The next question is from the line of Shreedhar Chandran from Prasid Capitals. Please go ahead. Yes. Thank you again for the. The last question on the P and G household connection work and the distribution. So despite government support and expansion of the city gas infrastructure, So it could see ATGL has added approximately 40,000 domestic PNG household connections in this quarter. And I would like to understand what is preventing faster conversion of the existing network into active household connections? Can management come into specific connection targets for the next twelve to twenty four months with the milestones to demonstrate how this expansion will translate into incremental to revenue target?

26:00 No. We are very much focused on increasing the domestic penetration. We are aiming at closing more than two lakh connections this year. That is very sizable number if you see. And in terms of volume growth, per capita on an average is around 0.4 SCMD of the volume. So any new connection which is added will offer us close to around 0.4 SCMD of gas volume addition. That is a growth potential. And we are very much keen and we are very much focused in terms of development of P and G for households and our key areas as well as our new GAs. That is the basic priority all across in terms of adding more and more households.

26:49 Yes. Thank you. Thank you. Participants to... Who wishes to ask a question, please press star and 1. Anyone who wishes to ask a question may press star and 1 now. Ladies and gentlemen, you may please press star and 1 to ask a question now. As there are no questions from participants, with that, we conclude today's conference call. Ladies and gentlemen, on behalf of Adani Total Gas Limited, that concludes this conference.

27:58 Thank you for joining us, and you may now disconnect your lines. Thank you.