All You Need To Know About Adani Gas Listing
Adani Gas Ltd., the biggest winner in the ninth round of city gas distribution auctions, will be spun off and listed separately on the National Stock Exchange and BSE Ltd.
Shareholders of the combined Adani Enterprises Ltd. will get one share of Adani Gas for every one held. The record date is Sept. 7, which means investors owning shares as of Sept. 5 will only be eligible as it takes two days for settlement. A direct listing where a company sells shares directly to the public is cheaper than an open offer as no underwriters are involved.
Adani Gas supplies gas for cooking and automobiles in Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana and Khurja in Uttar Pradesh. The company’s joint venture with state-owned Indian Oil Corporation Ltd.—IndianOil-Adani Gas Pvt. Ltd.—separately has rights to distribute gas in nine other cities.
Adani won rights to develop the distribution infrastructure for 13 regions by itself in the recent auctions. Its joint venture with Indian Oil will develop another nine areas. Adani Gas expects all the 31 areas to be operational by financial year ending March 2025.
The auctions were part of the government’s effort to increase the share of gas, a cleaner fuel, from 6 percent to 15 percent by 2030. Besides helping India reduce its carbon footprint in accordance with the COP-21 protocol, that would also reduce the oil import bill.
Adani Gas will be the fourth listed city gas distribution company after Indraprastha Gas Ltd., Gujarat Gas Ltd. and Mahanagar Gas Ltd. Its operational profit grew at a faster pace than peers in the last five years. Revenue growth remained subdued due to limited growth in sales volumes.
Based on the average valuation of a city gas distribution company, Adani Gas could be valued at Rs 35-40 per share, according to BloombergQuint calculations. Given the future growth prospects the industry, it could list at a premium.