Prabhudas Lilladher's research report on GAIL India
We upgrade the stock from ‘Hold’ to ‘Accumulate’ with trading margins normalizing back in Q4 and likelihood of transmission tariff revision in FY26. GAIL reported lower-than-estimated results with an EBITDA of Rs28.4bn (down 24.2% QoQ, PLe: Rs34.2bn, BBGe: Rs36bn), while reported PAT came in at Rs38.7bn (up 45% QoQ, PLe:Rs21.7bn, cons est:Rs23.9bn) due to extraordinary gain of Rs24.4bn pertaining to the payment of US$285mn by an LNG supplier towards settlement litigation for non-supply of LNG cargos for FY23. Adj PAT came in at Rs14.3bn, down 47% QoQ. Transmission volume decreased 3.6% QoQ with its EBITDA declining 1.3% QoQ, while trading volume grew 7.1% QoQ with its EBITDA rising 103.2% QoQ. Going forward, we build in volume growth of 8%/5% CAGR in the transmission/trading segment over FY25-27E to reach 150/110mmscmd in FY27.
Outlook
The stock is currently trading at 12/11.8x FY26/27 EPS. We upgrade the stock to‘Accumulate’ with a TP of Rs192, valuing it at 12x FY27 adj EPS of Rs13.2 and listed/unlisted investments at Rs34.
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