Nov 01, 2012, 11.11 AM | Source: Moneycontrol.com
KRChoksey is bullish on GAIL India and has recommended buy rating on the stock with a target of Rs 410 in its October 30, 2012 research report.
, KRChoksey |
“GAIL reported 13% dip in net profit to Rs 985 cr against Rs 1,134 cr on Q-o-Q basis. Fall in transmission volume to 106 mmscmd and higher subsidy sharing of Rs 785 cr (Rs 700 cr in Q1FY13) dragged down profit. In Q2FY13, 4LNG cargo volumes failed to offset the impact of lower KG d6 supply, the company has planned to import total 14 LNG cargo for FY13 and Management indicated that the Dabhol and Kochi terminal should be operational by 4QFY13 and could lead to an exit rate of 115mmscmd by the end of FY13. Based on facts, overall rise in gas transmission volume subjected to be more than offsetting any further decline in KG-D6 vols.One time hit of Rs 120cr due to retrospective tariff adjustment of Jamnagar-Loni LPG pipeline.”
“GAIL reported ~50% dip in gas trading EBITDA almost to Rs246cr (Rs499cr in Q1FY13), continuing to display significant unpredictability. Gas Tading volumes fell to 81 mmscmd because of a fall in PMT volume and lower offtake because of monsoons. GAIL has also not gained much from lower spot LNG prices which have boosted volume at both PLNG's Dahej and Shell's Hazira terminals . The sharp fall in gas trading EBITDA was mainly due to a one-off gain in Q1FY13 because of inventories being carried forward.”
“GAIL has a diversified business hence we have valued it on SoTP basis and arrived at a valuation of Rs 410/share of which Rs 248/share is contributed by core business of transmission & natural gas trading and cyclical business at Rs 76/share. We value investments at Rs 71/share and Myanmar E&P block at Rs 13/share. At CMP of Rs 354 the stock is trading at 10.3X and 9.3x of FY13E & FY14E. We recommend buy on the stock with a Price Objective (PO) of Rs 410 (intrinsic value) representing a potential upside of 16% over a period of 12 months,” says KRChoksey research report.
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