Adani Total Gas Ltd (ATGL) stock rose nearly 13% to ₹660.7 on Friday, accompanied by trading volume of 39 million shares, the highest since 27 May, 2026, indicating strong buying interest. However, shares cooled off slightly on Monday, falling by 3% from the previous session's highs. According to reports from the source, the reason for the sudden jump in volume and price remains unclear to market observers.
ATGL's market capitalization of about ₹70,000 crore remains significantly higher than comparable city gas distribution (CGD) peers. As reported by the source, Indraprastha Gas Ltd (IGL) has a market value of almost ₹20,800 crore and Mahanagar Gas Ltd (MGL) has ₹10,600 crore, respectively. This valuation gap is notable given that ATGL's consolidated net profit of ₹656 crore in FY26 is well below IGL's ₹1,390 crore and MGL's ₹850 crore.
The stock trades at a price-to-earnings multiple of over 100 based on FY26 earnings, with the gauge likely to remain above 100 based on FY27 estimated earnings arrived at by annualizing Q1FY27 net profit. According to the source, this high valuation raises questions about whether future earnings prospects merit the Street's optimism. The company's blended cost of gas per standard cubic meter (scm) in Q1FY27 was ₹48 versus ₹43 for IGL and ₹40 for MGL, resulting in ATGL's gross margin per scm being the lowest in at least the last nine quarters at ₹14.6.
ATGL benefits from strong parentage with Adani group and TotalEnergies having equal stakes of 37.4% each. As reported by the source, France's TotalEnergies, the world's second-largest private player in the liquefied natural gas (LNG) market, should help in strategic sourcing of imported natural gas. ATGL operates across 53 geographies (19 through joint ventures with Indian Oil Corp.) in 125 districts, compared to IGL serving across 12 geographical areas covering 32 districts and MGL serving 8 areas. Unlike IGL and MGL, which are dominant in metro cities and adjoining areas that are relatively more saturated, ATGL operates across wider, less-penetrated geographical areas.
Despite ATGL's wider geographical presence, its revenues remain less than half of the biggest player IGL's FY26 and Q1FY27 revenues. As reported by the source, investors may have been shunning IGL lately due to Delhi-NCR's clean transportation policy that aims to pivot from CNG to electric-based commercial transport. The policy could potentially hurt IGL's revenues, while ATGL's growth may well catch up. However, the question remains whether this justifies the steep valuation that ATGL enjoys, with investors potentially better off dividing their bets on relatively cheaper options in the sector like IGL and MGL.
