India is running out of gas. Why is Adani Total Gas running up?

Shares of Adani Total Gas have surged nearly 28% in just two trading sessions.

On 11 March, while the overall Indian stock market resumed its meltdown over the fallouts of the war between US-Israel and Iran, the city gas distributor’s stock shot up 20%. The following day, it rallied again, jumping another 7%, going well past the levels it traded at before the conflict in West Asia launched in late February.

But that’s far from normal.

In fact, the ongoing war and the consequent near-closure of the Strait of Hormuz, a vital global-trade artery, had choked companies that depconclude on imports. The Ken, on 4 March, wrote how the war had put Petronet LNG, India’s largest gas importer, in dire straits.

More than half of India’s natural-gas requirements are imported, and a chunk of it is routed through this narrow waterway. So a disruption there would also effectively put a squeeze on city gas distributors, such as Adani Total Gas and others—including Gujarat Gas, Indraprastha Gas, and Mahanagar Gas—that also rely on the likes of Petronet to meet their customers’ demand.

Indeed, Adani Total Gas had informed its industrial and commercial utilizers to limit consumption to less than half their contracted volumes or pay more than double the contracted price for the excess, while Gujarat Gas declared force majeure on its gas-supply agreements with industrial utilizers.

Yet, their stocks edged higher.

Besides Adani Total Gas, in a falling market, shares of Mahanagar Gas, Indraprastha Gas, and Gujarat Gas have jumped 1–4% between 10 March and 12 March.

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