Prabhudas Lilladher is bullish on GAIL has recommended buy rating on the stock with a target price of Rs 513 in its research report dated October 10, 2017.
Prabhudas Lilladher's research report on GAIL
GAIL has multiple growth drivers in the medium term led by improving profitability at the Petrochemicals and LPG division on the back of higher volumes and benign gas prices. Implementation of unified pipeline tariff could be a game changer and remains an upside risk against our estimates of modest tariff increase. Also, concerns on placement of US LNG volumes are overdone as 86% of FY19E volumes are tied in, while for the long term, we expect US LNG will be placed in the Eastern India as government revives fertiliser plants and create new city gas networks in seven cities with potential demand of ~15mmscmd.
We expect GAIL’s earnings to increase at 16% CAGR over FY18‐20E. Reiterate “BUY” with a revised DCF‐based PT of Rs513 (Rs429 earlier) as we revisit our volume and realisation assumptions and on roll over to FY20E.
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