Hold GAIL India; target of Rs 386: R K Global

“GAIL (India) Ltd. (GAIL) reported 15.1% Y-o-Y increase in its net profit to Rs11337.8mn on a 25% Y-o-Y growth in net sales of Rs110886.2mn during Q1FY13. The company share towards LPG subsidy has increased 2.7% Y-o-Y to Rs7000mn.”

“GAIL reported revenue of Rs110886.2mn in Q1FY13 as compared to Rs88673.8mn in Q1FY12, registering a growth of 25.0% Y-o-Y (increased 6.1% on sequential basis). The revenue growth is attributed to Natural Gas trading sales which grew 28.3% Y-o-Y, representing 83.3% of GAIL’s gross sales.   GAIL reported 21.9% Y-o-Y increase in its Core EBITDA to Rs19224.9mn during Q1FY13 as compared to Rs15771.8mn in Q1FY12 (increased 150.4% on sequential basis) on account of net sales which increased 25.0% Y-o-Y due to increase in income in natural gas trading and LPG & Liquid Hydrocarbons by 28.3% and 31.8% respectively.   GAIL reported net profit of Rs11337.8mn in Q1FY13 as against Rs9846.7mn in Q1FY12 registering growth of 15.1% Y-o-Y. Company’s interest cost and depreciation increased 182.7% Y-o-Y and 21.8% Y-o-Y respectively to Rs587.8mn and Rs2169.2mn respectively.”

“At CMP of 365.5, the stock is trading at P/E and EV/Core EBITDA of ~10.8x and ~7.3x respectively of FY13E EPS of Rs34 and EBITDA of Rs68439mn respectively. We updated our model incorporating Q1FY13 earnings for GAIL to arrive at our SOTP value of Rs386 (earlier target Rs385), which offers an upside of ~5.6% from current level. We reiterate our “HOLD” rating on the stock,” says R K Global research report.   

Non-Institutions holding more than 90% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.