ATGL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 2.6

📊 Core Financials

• Revenue & Profitability: PAT remained flat at 162 Cr. vs previous quarter, with Qtr Profit Var at -9.22% indicating weakness.
• Margins: ROE at 16.7% and ROCE at 17.4% show moderate efficiency but not strong enough to justify valuations.
• Debt: Debt-to-equity ratio of 0.45 indicates manageable leverage.
• Cash Flow: Dividend yield of 0.04% is negligible, offering minimal shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 101 vs Industry PE of 20.4 — extremely overvalued.
• P/B Ratio: Current Price 569 ₹ vs Book Value 40.8 ₹ → ~13.9x, expensive.
• PEG Ratio: 11.6, suggesting growth does not justify valuation multiples.
• Intrinsic Value: Current valuation far exceeds fundamentals, leaving limited margin of safety.

🏢 Business Model & Competitive Advantage

• Adani Total Gas operates in city gas distribution, focusing on PNG and CNG supply.
• Competitive advantage lies in scale, infrastructure, and integration within the Adani Group ecosystem.
• However, profitability growth remains weak, limiting long-term resilience unless earnings improve.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive only near 500–530 ₹ range, closer to intrinsic fair value and below DMA 200.
• Long-Term Holding: High-risk investment at current valuations; suitable only for aggressive investors betting on gas distribution growth.

✅ Positive

• Moderate ROE (16.7%) and ROCE (17.4%).
• Debt-to-equity ratio (0.45) indicates manageable leverage.
• Stock trading near support levels (RSI 35.7 suggests oversold conditions).

⚠️ Limitation

• Extremely high P/E (101) compared to industry average (20.4).
• P/B (~13.9x) indicates premium valuation.
• PEG ratio (11.6) highlights poor earnings growth alignment.
• Dividend yield (0.04%) is negligible.

📉 Company Negative News

• PAT stagnated quarter-on-quarter with -9.22% variation.
• FII holding reduced (-0.14%) and DII holding reduced (-0.08%), showing declining institutional confidence.

📈 Company Positive News

• Stable PAT despite sector challenges.
• Stock trading near oversold RSI levels, offering potential accumulation opportunity.

🌐 Industry

• Industry PE at 20.4, much lower than ATGL’s valuation.
• City gas distribution sector benefits from government initiatives and rising demand for clean energy.

🔎 Conclusion

• ATGL is fundamentally weak with modest efficiency but extreme overvaluation.
• Current valuations make entry unattractive, with limited upside potential.
• Best suited for accumulation only near 500–530 ₹ levels.
• Long-term holding is risky unless profitability improves and growth justifies premium valuations.