On 23 March, the market cap of Ahmedabad-based city gas distributor Adani Total Gas crossed the Rs 1,00,000 crore ($13,290 million) mark. Heads turned, headlines were made. The stock had raced past some of the biggest names in the Indian stock market, including oil and gas giants such as Indian Oil and GAIL (India). Crossing the milestone was all the more striking because the company is still a minnow, relatively speaking, when it comes to revenue and profit.

This tweet on 6 April by investor Giriraj Daga, comparing the stock with other gas utilities, sums up the conundrum that is Adani Total Gas.

Investors in ‘Adani’ stocks sure have reason to smile and pose. Four of the six stocks in the stable are now past the Rs 1,00,000 crore market cap ($13,290 million) mark; one is within kissing distance. To put it in perspective, there are now five decacorns (companies valued at over $10 billion) in the Adani Group. All the six stocks have staged spectacular rallies over the past year, making the most of the manic bull run on the bourses. 

Top of the charts is Adani Total Gas with 1-year gains of over 1000%. This, after slipping about 14% last week. From Rs 93 ($1.24) a year back, the stock is now at Rs 1,039 ($13.81). Its price-to-trailing earnings valuation currently is an astronomical 255X, compared to the 19-39X of its bigger peers Indraprastha Gas, Mahanagar Gas and Gujarat Gas. 

Is it just the Adani name, and the Midas touch that it seemingly bestows seemingly bestows Economic Times Adani Group's market cap crosses $100 billion Read more , that has sent the stock soaring? Or is there more to it than meets the eye? There is little recent analyst coverage on most Adani stocks including Adani Total Gas due to their very high valuations, say news reports. 

The supposed proximity of the Adani Group with the ruling dispensation at the Centre could also be a reason for the thin coverage, says a market observer. Not many want to bell this cat, it seems, at least not openly. But two market analysts The Ken spoke to, who requested anonymity, pointed towards the shareholding of the Adani companies as the reason for the sharp rally in the stocks. There is a pattern here.

The government, meanwhile, is pushing for more piped gas penetration. Favourable government policy has given a huge leg-up to city gas distribution (CGD) players, and Adani could be right there at the top. 

Foreign element

The public shareholding in five of the six Adani stocks (including Adani Total Gas) is a tad above the minimum public stake of 25% mandated by market regulator Sebi.

AUTHOR

Anand Kalyanaraman

A certified Chartered Accountant, Anand chose to pack the power of numbers with words when he left a career of seven years in accounting, putting together MIS reports, and investment research to enter journalism. Before joining The Ken, Anand was Deputy Editor at The Hindu BusinessLine, a newspaper he worked at for 11 years.

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