Accumulate GAIL (India); target of Rs 396: Dolat Capital

Dolat Capital's research report on GAIL (India)

GAIL’s Q4FY19 revenue were in line with our estimates. Profitability was below our estimate, due to weakness in the petchem, LPG, and LHC business, which was offset by the gas marketing business. Considering the volatility in crude oil, performance in the gas marketing segment is commendable and lead us to believe that H1FY20 results will be robust. The management continues to guide that all cargoes expected in short term are completely hedged. The gas transmission volumes at 109 MMSCMD were marginally below our estimate and we do not expect it to increase significantly in FY20.

Outlook

The risk to our call remains a significant decline in profitability in the gas marketing segment. We maintain Accumulate, with a TP of ` 396. (13x FY21E).