Adani Total Gas Gets Rating Upgrade From ICRA

ICRA, a leading credit rating agency, has upgraded the long-term rating of Adani Total Gas Limited (ATGL) to ‘AA’ from the previous rating of ‘AA-‘. This upgrade has come with a stable outlook, reflecting a positive evaluation of the company’s creditworthiness.

Rationale

The upgrade to ‘AA’ shows ICRA’s confidence in ATGL’s financial performance and positioning in the energy sector. Key factors contributing to this rating include the company’s consistent growth in revenue, strong profitability, and a solid capital structure. For FY24, Adani Total Gas reported a 71% y-o-y growth in consolidated net profit to Rs.168 crore, up from Rs.98 crore a year ago. Revenue from operations increased by 5% y-o-y to Rs.1,258 crore, compared to Rs.1,197 crore in the same period last year.

Operational Strengths 

ATGL has shown adaptability in a fluctuating market environment. The company has effectively managed its operational costs, thereby maintaining healthy profit margins. Furthermore, ATGL is focusing on expanding its geographic footprint and customer reach. The company operates in 19 geographical areas across India. The integration of advanced technologies and adherence to high safety standards have also helped the company’s operational efficiency, supporting the long-term sustainability of its business model.

Partnership and Future Outlook

The partnership with Total Energies, a global energy giant, has been instrumental in strengthening ATGL’s market presence. Total Energies holds a 37.4% stake in ATGL, facilitating resource optimization. This collaboration has enabled ATGL to leverage sound practices in its operations. The stable outlook assigned by ICRA reflects the expectation that ATGL will continue to benefit from its strategic initiatives and maintain its growth trajectory.

Market Opportunities 

The upgraded rating is likely to have positive implications as a higher credit rating generally translates to lower borrowing costs and improved access to capital markets. Additionally, this upgrade positions ATGL favorably in the competitive energy sector, potentially attracting more investment and partnership opportunities.

Conclusion: ICRA’s upgrade of Adani Total Gas’s long-term rating to ‘AA’ signifies a strong confidence in the company’s operational and financial performance. With a stable outlook, ATGL seems well-positioned to capitalize on future growth opportunities while maintaining its commitment to delivering value to its stakeholders. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.