Positron Energy

India’s energy landscape is undergoing a significant transition, with natural gas playing an increasingly crucial role in the country’s energy mix. The government aims to increase natural gas’s share in the energy mix from the current 6.7% to 15% by 2030, creating a complex ecosystem of opportunities and challenges. This transformation is driven by multiple factors: the push for cleaner energy alternatives, growing industrial demand, expansion of city gas distribution networks across 300+ geographical areas, and the evolution of market mechanisms like the Indian Gas Exchange (IGX). Within this shifting landscape, various players - from state-owned giants to emerging private companies - are positioning themselves to capture different segments of the value chain, from gas sourcing and aggregation to last-mile distribution.

Before we talk about the company, lets understand Industry’s value chain and where the company is present in that value chain

History of the company and its evolution

Positron Energy Limited has evolved from a consultancy-focused firm to a company that actively participates in gas aggregation and distribution, while continuing to offer its technical and management advisory services. The company has expanded its scope to include natural gas and CBG, alongside its initial focus on CBM. They also have collaborations for technology development in the dual-fuel space.

Phase 1: The Consulting Years (2008-2019)

• Started as a pure-play consulting firm

• Built relationships with major oil and gas players

• Developed industry expertise without heavy capital requirements

Phase 2: The Transition (2019-2021)

• Entered CBM gas aggregation

• Maintained consulting business

• Began building distribution capabilities

Phase 3: Current Position (2021-Present)

• Primary focus on natural gas aggregation and sales

• Consulting now represents a smaller but stable revenue stream

• New ventures into dual-fuel systems through ICOM collaboration

How do they make money?

Positron Energy Limited is primarily engaged in two main business activities: Management and Technical Consultancy Services and Gas Aggregation and Sales.

Here’s a breakdown of their business model:

1. Management and Technical Consultancy Services:

• Positron offers its expertise in the oil and gas industry to other companies.

• This includes providing services such as:

  • Management Consulting: This involves regulatory studies, technical and commercial feasibility reports, and market assessments.

  • Technical Services: This includes project management, operations, and maintenance of gas distribution networks and related infrastructure like CNG and small-scale LNG.

  • Customized Solutions: They aim to provide innovative solutions tailored to their clients’ needs.

2. Gas Aggregation and Sales:

• Positron sources and sells natural gas and Regasified Liquefied Natural Gas (R-LNG).

• They aggregate gas from multiple sources to supply industrial units across India.

• This business segment includes the following services:

  • Natural Gas Aggregation and Sales: They procure and sell natural gas and R-LNG, offering competitive prices and flexible tax models.

  • Gas on Wheel Solution: This involves providing gas to areas that are not connected to pipelines, using specialized containers for transportation.

  • LNG Distribution Solution: They market and deliver LNG to industries and commercial clusters, managing the entire process from project initiation to on-site operations.

What interested me is there is exceptionally fast growing low margin low capital intensive trading business. The working capital management will be a key monitoring item for this business

Gas Aggregation is a Volume Game, so far their trajectory is nice

• Gas aggregation volume: 50 MMSCM (Million Metric Standard Cubic Meters)

• Daily gas volume handled: 8,000 MMBTU (Metric Million British Thermal Units)

• New contracts in FY25: 10,000 MMBTU, with plans to add 3,000 - 5,000 MMBTU more

Technocrat leadership

Positron Energy Limited is led by a team of seasoned professionals with extensive experience in the oil and gas industry:

Rajiv Shankarankutty Menon – Managing Director

At 44 years old, Rajiv Menon serves as the Managing Director of Positron Energy Limited. He holds a Bachelor of Commerce (B.Com) degree from Mahatma Gandhi University. With over 15 years of experience in the oil and gas sector, Rajiv has been instrumental in steering the company’s strategic direction and growth initiatives.

Manav Bahri – Whole Time Director and Chief Executive Officer

Manav Bahri, aged 47, is the Whole Time Director and CEO of Positron Energy Limited. He is an engineering graduate with an MBA from Symbiosis Institute of Management. Manav brings over 15 years of experience in the energy sector, having worked with leading oil and gas majors such as Indo Mobil (Mobil Corp.), ExxonMobil, and Gujarat Gas Company Limited. His expertise spans strategic negotiation and execution of gas contracts, gas sourcing, and the implementation of greenfield gas distribution projects. Notably, he pioneered the ‘Gas on Wheels’ project in Jharkhand, facilitating innovative gas distribution systems in the region.

Sujit K. Sugathan – Whole Time Director and Chief Financial Officer

At 41 years old, Sujit Sugathan serves as the Whole Time Director and CFO of Positron Energy Limited. He holds a Bachelor’s degree in Electrical Engineering and an MBA in Oil and Gas Management. As a co-founder of the company, Sujit has over 15 years of experience in the oil and gas industry. He has been pivotal in conceptualizing the ‘Gas on Wheels’ model, enabling the monetization of stranded Coal-bed Methane Gas in Jharkhand. Before venturing into consultancy, Sujit gained valuable experience in one of India’s largest City Gas Distribution companies, working on projects involving gas trading demand analysis, regulatory affairs, and LNG project design

Collectively, this leadership team leverages over 45 years of combined experience to drive Positron Energy’s mission of providing comprehensive gas distribution solutions across India.

Besides the promoters who also hold key positions, the KMP includes:

Koikalethu Abraham Liji is the Chief Technology Officer (CTO). He has an experience of more than 25 years in the Technical services relating to Oil & gas Industry. He also hold 1% stake in the company.

Why Positron is a Stock to Watch

Natural Gas Boom in India

• India’s natural gas demand is set to double by 2030, with CGD networks expanding rapidly.

• Government initiatives promoting clean energy (CBG, LNG) are driving gas consumption.

• Recent gas allocation policy changes have opened new industrial demand centers.

Strong Leadership

• Founded by Rajiv Menon, Manav Bahri, and Sujit Sugathan, with a combined 45+ years of experience.

• Key strategic partnerships include ICOM North America for LNG solutions.

Diversified Portfolio & Innovation

• End-to-end gas distribution services across CGDs, industries, and commercial clusters.

• Investment in Dual-fuel LNG conversion systems to cater to emerging green energy demand.

Key Risks to Watch

Like any growing business, Positron Energy faces challenges, including:

1. Thin Margins in Gas Aggregation – A high-volume, low-margin business requiring strong contract structuring.

2. Commodity Price Volatility – Gas prices are influenced by global crude oil benchmarks like Brent and Henry Hub.

3. Regulatory Risks – Government policies on gas allocation and pricing can impact profitability.

4. Customer Concentration Risk – 91% of revenue comes from just 10 customers.

The Numbers First: H1 FY25 Snapshot

Before we dive into the story, let’s look at the latest numbers:

• Revenue: ₹69.98 crores (up from ₹50.12 crores in H1 FY24)

• EBITDA: ₹6.80 crores (up from ₹2.77 crores)

• PAT: ₹4.74 crores (up from ₹1.92 crores)

• Daily gas volume: Over 8,000 MMBTU (as of September 2024)

What’s particularly interesting is the shift in revenue mix:

• Natural gas sales: 92% of revenue in H1 FY25, I dont think this will change

• Management & Technical Consultancy: 8% of revenue

• CBM Gas Distribution: Notably absent in H1 FY25 compared to previous periods

All three sub verticals within Gas distribution business have their unique margin profile as you can see below

The company is trading at net of cash market cap of ~INR 140 crore with expected PAT of 10cr+ in FY25

While the company has shown impressive growth in recent periods, please carefully consider:

1. The sustainability of current growth rates

2. The impact of future regulatory changes

3. The company’s ability to manage larger scale operations

4. Competition from both established and new players

5. Working capital requirements for expanded operations

but the story certainly merits attention