Adani Total Gas shares plunge 13% in two trading sessions; here is why

Shares of Adani Total Gas fell for a second straight session on Monday, March 16. The stock has dropped as much as 13% in two sessions after surging a whopping 30% in previous three trading sessions from March 10-12.

The stock came under selling pressure after the company informed exchanges that it has cut the price of excess natural gas supplied to certain industrial customers to ₹82.95 per standard cubic metre (SCM) from ₹119.90 per SCM, effective 0600 hours on March 16, as upstream gas prices softened amid ongoing supply disruptions.

The city gas joint venture of Adani Group and France's Total Energies said the revision aims to pass on the benefit of lower upstream prices to customers while maintaining system stability and equitable distribution of gas during the current supply constraints.

Adani Total Gas’ recent rally came on the back of surging demand for natural gas in the country. India is facing an LPG shortage crisis as the shipments of crude oil and natural gas from the West Asian Gulf countries get affected due to the raging conflict between the United States and Iran.

Investors' confidence in the company’s assurance of mitigating risks, along with the high demand for the commodity are key triggers which are driving up the stock on the Indian market.

The global maritime trade for oil and natural gas has been disrupted after Iran has been exercising strategic control over the tanker trade passing through the Strait of Hormuz, which serves as one of the busiest chokepoints for multinational energy exports.

On March 12, a report from Hindustan Times suggests that a Liberian flagged oil tanker berthed at the Mumbai port on Thursday after it safely transited the Strait of Hormuz with Saudi Arabian crude oil on board. However, the trade route remains subject to attacks as per several media reports.

As of 12:18 pm, Adani Total Gas shares traded 6.8% lower at ₹526, underperforming the NIFTY50 index which was trading on a flat note.