Adani Total Gas shares hit lower circuit; stock down 79% in 2023 so far; here's what tech charts hint

Shares of Adani Total Gas were locked in the lower price band for the second straight session in Tuesday's trade. The stock today tanked 5 per cent to hit a low of Rs 738.60 over its previous close of Rs 777.45. The scrip has plunged 79.19 per cent on a year-to-date (YTD) basis. It has traded lower in eight out of 11 trading sessions in May so far. The stock continued to fall despite exiting the ASM (additional surveillance measure) framework.

Adani Total resumed fall earlier this month after Ahme­dabad-based chartered accountancy (CA) firm Shah Dhandharia & Co resigned as statutory auditor of the company. Shah Dhandharia was named in Hindenburg Research's report. The audit firm has been replaced by Walter Chandiok & Co.

Adani Group shares saw a massive market value erosion since January 24 this year, when US-based short seller Hindenburg released a report alleging stock manipulation and accounting fraud by the energy-to-ports conglomerate. The US-based short seller had also raised the issue of the size and capability of the CA firms (including Shah Dhandharia) auditing the Adani Group. Adani and Shah Dhandharia, however, denied all the allegations.

Besides this, market regulator Sebi is currently probing the Adani Group for possible lapses in regulatory disclosures. The Supreme Court is hearing an appeal from the Securities and Exchange Board of India (Sebi) to give it an additional six months to complete its probe into the Adani Group. The regulator has sought six months to complete its probe.

In addition, MSCI, a New York-based finance company, removed Adani Total and one more Adani firm (Adani Transmission) from its global standard index. The fresh adjustments would take place on May 31, 2023.

On the earnings front, Adani Total reported a 21 per cent increase in net profit for the quarter that ended March 2023. Net profit climbed 20.74 per cent to Rs 97.91 crore in the January-March quarter compared to Rs 81.09 crore in the corresponding period a year ago. The company is a joint venture of Adani Group and France's TotalEnergies which retails CNG to automobiles and piped gas to households.

On technical charts, the stock looked 'bearish', analysts said.

"Adani Total Gas looks bearish but also oversold on the daily charts with strong support now at Rs 681. Investors should buy only if a daily close is above the resistance of Rs 860 for higher targets of Rs 940-1,040 in the near term." AR Ramachandran from Tips2trades.

"The stock is currently trading at 150x its EPS (Earnings Per Share) which put the valuation on higher side. RoE (Return on Equity) seems reasonable at 20.50 per cent. On technical setup, it seems weak, trading below 50- and 200-day moving averages (DMAs). The stock can correct more and can touch Rs 650 level," said Ravi Singh, Vice-President and Head of Research at Share India.

"The counter gave a bearish indication recently. The share price may tank more towards Rs 640-600 levels in the coming days. For Fresh buying, one should wait a little more. Rs 500 to Rs 600 could be a strong demand zone in this stock and after that targets between Rs 800 and 1400 could be possible. Stop loss should be placed at Rs 400," said VLA Ambala, Research Analyst at Stock Market Today.

Meanwhile, Indian equity benchmarks fell sharply today, dragged by financials, banks and automobile stocks.

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