FY20 was a challenging year for both global economy and global energy sector. Global economy has shown signs of softening in the wake of rising tariffs, escalating trade tensions and policy uncertainty. Covid 19 has further aggravated the position as it resulted into a substantial economic crisis worldwide. Despite numerous challenges such as low oil and gas prices, limited economic growth and reduced petrochemical margins, GAIL delivered incredible results on several fronts with enduring spirit- highest ever profit. Physical performance remained positive in most areas including construction of natural gas pipelines, expansion of new gas markets in different parts of country, development of new gas markets, petrochemical production including new petrochemical grades, etc. GAIL owns over 70% of India’s gas transmission network, operating around 12,426 km of natural gas trunk pipeline. As a part of providing natural gas across India, GAIL is executing around 7,500 kms of pipeline projects in various parts.
OutlookThe stock price seems to be factoring in most of the negatives. We maintain Accumulate, with a target price of Rs 113 (10x FY22E).
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