Adani Total Gas share price zooms 14%, jumps 37% in two days: What's behind the rally?

Shares of Adani Total Gas zoomed over 14% in intraday deals on Thursday, March 12, defying the slump in the Indian stock market, amid concerns over tightening natural gas supplies in India due to escalating geopolitical tensions in the Middle East.

The stock rose as much 14.19% intraday to ₹650 apiece on the BSE. This was the second day of gains for the Adani group company after it rallied 20% in the last trading session.

Why are Adani Total Gas shares rising?

Adani Total Gas, and other city gas distributors (CGDs) like Gujarat Gas and Indraprastha Gas also gained as investors bet that they could benefit from higher gas prices and government directive prioritising gas supply for essential segments such as household PNG and CNG used in transport.

The government issued a Natural Gas Supply Regulation Order, prioritising gas allocation for CNG used in transportation and piped natural gas supplied to households.

The move comes at a time when geopolitical tensions in West Asia have raised concerns about LNG supply disruptions and potential volatility in global gas markets.

Qatar, which supplies 20% of the world’s LNG, shut the Ras Laffan export facility last week after an Iranian drone strike, upending the market and sending the price of gas in Europe and Asia soaring.

India, which sources about half its LNG from Qatar, is looking to procure alternative shipments for immediate delivery, traders told Bloomberg.

India consumed 33.15 million metric tons of ​cooking gas last year, with imports accounting for about 60% of demand. About 90% of those ‌imports ⁠came from the Middle East, according to a Reuters report. Meanwhile, it also imports about half of its 190 million standard cubic metres per day (mscmd) of gas consumption.

Adani Total Gas on Wednesday said that some of the gas suppliers of the company have curtailed the gas supply, which in turn has impacted our supplies to industrial customers.

"The Company appreciates the Government’s prompt efforts in bringing out the said Order and according priority for the gas supplies to domestic PNG and CNG customers, as well as supply of PNG to industrial and commercial Customers," it added.

Furthermore, investors are also factoring in the possibility that tighter global supply could support firmer gas prices, which tends to improve earnings visibility for city gas distributors.

Adani Total Gas has nearly tripled gas prices for large industrial consumers after disruptions to LNG supplies, sources told PTI. The company raised industrial gas prices to about ₹119 per standard cubic metre from ₹40, the report added.

“Demand for CNG and PNG in India remains structurally strong due to rising urbanisation, favourable pricing versus liquid fuels, and policy support for cleaner energy. In a market environment where energy security has become a key theme, gas utilities are increasingly being seen as defensive plays with stable demand. The rally, therefore, reflects a combination of policy support, supply-side global risks and improving sentiment toward the broader energy value chain,” said Harshal Dasani, Business Head at INVasset PMS.

CDG stocks join the rally

Shares of Indraprastha Gas and Gujarat Gas also joined the rally. Gujarat Gas share price jumped 10% to ₹432, extending the rally to the third day. Meanwhile, Indraprastha Gas stock also jumped over 1% to ₹164.40.

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