Global credit rating agency ICRA upgraded the rating of Adani Total Gas Ltd (ATGL) to “AA” from “AA-” with a stable outlook on Friday.
In a note, the rating agency attributed the long-term rating upgrade of ATGL to its improving financial risk profile, supported by sustained growth in sales volume, which has led to a higher scale of operations and enhanced profitability.
“The stable outlook reflects ICRA’s expectation of healthy growth in ATGL’s sales volume, driven by a favourable demand outlook,” the note stated.
The stock of Adani Total Gas surged by 2.30 per cent on Friday.
ICRA highlighted that overall contribution margins have been improving, aided by a favourable gas allocation policy for the city gas distribution (CGD) sector and robust growth in compressed natural gas (CNG) volumes.
“The ratings also take into account the rising revenue share from the new geographical areas (GAs) awarded in the recently concluded 9th and 10th CGD bid rounds,” the note added.
The company currently has an installed capacity of around 6 MW, with more than 500 charge points under construction.
ATGL has continued to experience healthy growth in volumes in FY2024, driven by increased demand from legacy GAs and revenue contributions from new ones.
According to ICRA, ATGL has a balanced mix of CNG and piped natural gas (PNG) consumers, with the latter mainly consisting of industrial and commercial segments.
ICRA also noted that the long-term demand prospects are favourable, and the company is expected to benefit from the operationalisation and ramp-up of the CGD network in the newly awarded GAs in the 9th, 10th, and 11th bid rounds, which will fuel growth in scale.
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