Buy GAIL, target of Rs 340: Hem Securities

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Hem Securities has recommended a buy rating on GAIL , with price target of Rs 340, in its report dated June 29, 2009.

"GAIL has come up with promising results for FY09. Petrochemicals contributed 11% in Sales. The petrochemical realizations are expected to be better in the future. Liquid Hydrocarbons added 19% to the Gross margins. GAIL has set a target of transmitting 94.8 MMSCMD of natural gas from domestic sources and through LNG route during FY 2009-10 under the Annual Memorandum of Understanding signed with Ministry of Petroleum and Natural Gas for performance targets for the Financial Year 2009-10."

"During the FY 2009-10, to achieve the Excellence in performance, the Company has also targeted for Gas Marketing target of around 83.2 MMSCMD. The MoU also provides for an 'Excellent' production target of 400 TMT of Polymers (HDPE & LLDPE - High-Density Polyethylene & Linear Low- Density Polyethylene) and 1,260 TMT of Liquid Hydrocarbons. Presently, the company is running at a P/E multiple of 13.02x to its FY09 EPS of Rs 22.28. Based on the increase in the Gas sales and LPG transmission, we recommend 'BUY' on the stock with a medium term price target of Rs 340," says Hem Securities' report.

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