Buy GAIL India; target Rs 422: Firstcall Research

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Buy GAIL India; target Rs 422: Firstcall Research

Firstcall Research is bullish on GAIL India and has recommended buy rating on the stock with a target price of Rs 422 in its February 8, 2012 research report.

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Firstcall Research is bullish on GAIL India and has recommended buy rating on the stock with a target price of Rs 422 in its February 8, 2012 research report.

"GAIL India, is India's flagship Natural Gas company, integrating all aspects of the Natural Gas value chain (including Exploration & Production, Processing, Transmission, Distribution and Marketing) and its related services. GAIL is one of the leading public enterprises with a consistently excellent financial track record. Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 16% over 2010 to 2013E respectively. Company has signed a sale and purchase agreement (SPA) with Sabine Pass Liquefication, LLC, a subsidiary of Cheniere Energy Partners, L.P., USA for supply of 3.5 million tones per annum (MTPA) of LNG. The Company has tied up a term loan of US $ 100 million from Bank of Tokyo- Mitsbishi UFJ."

"The company disclosed results for the quarter ended December 2011. Net sales for the quarter moved up 35% to Rs.112941.50 million as compared to Rs.83836.20 million in previous year same quarter . During the quarter, The Company has posted a net profit of Rs 10914.20 million for the quarter ended December 31, 2011 as compared to Rs 9676.30 million for the quarter ended December 31, 2010. Total Income has increased from Rs 85742.10 million for the quarter ended December 31, 2010 to Rs 113155.00 million for the quarter ended December 31, 2011. The Basic EPS of the company stood at Rs.8.60 for the quarter ended December 2011."

"At the current market price of Rs.377.00, the stock is trading at 11.26 x FY12E and 9.67 x FY13E respectively. Price to Book Value of the stock is expected to be at 2.00 x and 1.66 x respectively for FY12E and FY13E. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.32.85 and Rs.38.25 respectively. On the basis of EV/EBITDA, the stock trades at 6.72 x for FY12E and 5.75 x for FY13E. Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 16% over 2010 to 2013E respectively. Company has signed a sale and purchase agreement (SPA) with Sabine Pass Liquefication, LLC, a subsidiary of Cheniere Energy Partners, L.P., USA for supply of 3.5 million tones per annum (MTPA) of LNG. The Company has tied up a term loan of US $ 100 million from Bank of Tokyo- Mitsbishi UFJ. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 422 for Medium to Long term investment," says Firstcall Research report.

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To read the full report click on the attachment