Feb 19, 2013 03:17 PM IST | Source:

Angel Broking neutral on GAIL India

Angel Broking maintained neutral rating on GAIL India in its February 14, 2013 research report.

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Angel Broking maintained neutral rating on GAIL India in its February 14, 2013 research report.

“GAIL India’s top line grew by 10.8percent yoy to Rs12,474cr (above our estimate of Rs11,986cr), mainly due to higher-thanexpected sales in the natural gas trading segment, which grew by 10.6percent yoy Rs10,118cr respectively. The company’s fuel subsidy burden stood at Rs700cr in 3QFY2013.”

“EBITDA increased by 16.4percent yoy: GAIL’s EBITDA improved by 13.7percent yoy to Rs2,002cr in 3QFY2013 and EBITDA margin improved by 41bp yoy to 16.0percent, mainly due to better petrochemical and LPG segment EBIT which grew by 13.4percent and 93.8percent yoy to Rs439cr and Rs592cr, respectively. Higher other income boosts PAT: Other income increased by 622.2percent yoy to Rs154cr, leading the net profit to increase by 17.7percent yoy to Rs1,285cr (above our estimate of Rs1,147cr).”

“Over the past one year, gas production from the KG basin has declined significantly. Further, we do not expect any meaningful increase in the production at KG D6 over the coming two years. Hence, we expect utilization levels for GAIL’s pipelines to remain low during FY2013-14. Moreover, a cap on the gas marketing margin (which is currently under review by the Petroleum and Natural Gas Regulatory Board (PNGRB)) would remain an overhang on the stock. Hence, we maintain our neutral rating on the stock,” says Angel Broking research report.

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