Torrent Gas plans IPO by FY24; eyes acquisitions in CGD business

MUMBAI: Ahmedabad headquartered-Torrent Group aims to hit the capital market with the initial public offer of its gas utility business, Torrent Gas, by 2023-24, a top executive told ET.

Torrent Gas, which could be the third listed company of the group, is investing Rs 8,000 crore on expansion of its city gas distribution (CGD) business. It is scaling up its compressed natural gas (CNG), and piped natural gas (PNG) businesses and is also looking for acquisitions in the sector, over and above this investment.

“Our aim is to go for value unlocking after we have reached a certain critical scale. We are fairly well capitalised and there is no urgency, so we want to time it to unlock better value. We would look at raising capital by FY23-24,” said Jinal Mehta, director, Torrent Gas.

Mehta said that the company has set a target of annual revenue of Rs 2,000 crore- Rs 3,000 crore, which will be the “critical scale” for an IPO. Currently, the company clocks revenue of around Rs 25 crore a month but expects it to double to Rs 50 crore by end of the year as it has recently added 42 compressed natural gas (CNG) stations, making the total number of stations it runs 100.

Torrent Gas is in the process of completing a Rs 8,000 crore investment in the next five years in CGD infrastructure; of this Rs 1,050 has already been invested.

“Despite the constraints presented by the Covid-19 pandemic, Torrent Gas has been able to set up 100 CNG stations within a relatively short span of time. We are now working towards our near-term goal of setting up 200 CNG stations by March 2021 and medium-term goal of setting up 500 CNG stations by March 2023, apart from making PNG widely available to industries and residences in our authorised areas,” Mehta said.

The Indian government has been undertaking policy reforms to lure investors into the sector to achieve its goal to be a gas-based economy. Currently, gas accounts for a little over 6 per cent of India’s energy mix, and the government aims to scale it up to 15 per cent by 2030, closer to the global average of 24 per cent.

The company will continue to participate in CGD bids and is also looking at acquisitions, as it has done in the past.

“CGD bidding round 10 saw fairly mellowed down aggression and was not as intense as before. Companies now have a lot on their plates and I don't see the possibility of new entrants coming in now as 70 per cent of the area has already been authorised. I think some maturity has come into the industry...market participants are now reasonable about what they are committing,” Meha said.