Angel Broking neutral on GAIL India

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26 Aug, 2025 12:21

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Angel Broking's research report on GAIL India

"GAIL India's top-line grew by 15.9 percent yoy to Rs 12,856cr (above our estimate of Rs 12,296cr), mainly due to increase in net sales in the Petrochemicals (+92.2 percent yoy) and Natural Gas trading (+19.7 percent yoy) segments. The company's fuel subsidy burden stood at Rs 700cr in 1QFY2014. EBITDA declined by 22.9 percent yoy: The Petrochemicals segment's EBIT grew by 123.8 percent yoy to Rs 438cr. However, Natural Gas trading segment's EBIT decreased 39.0 percent to Rs 303cr and the LPG segment reported a loss of Rs 11cr in 1QFY2014 compared to a profit of Rs 437cr in 1QFY2013. GAIL's EBITDA therefore declined by 22.9 percent yoy to Rs 1,464cr in 1QFY2014; the EBITDA margin contracted by 574bp yoy to 11.4 percent."

"The depreciation expense increased by 29.4 percent yoy to Rs 281cr, whereas the tax rate stood at 34.0 percent in 1QFY2014 compared to 32.7 percent in 1QFY2013. Consequently, the net profit declined by 28.7 percent yoy to Rs 808cr, which is below our estimate of Rs 918cr."

Outlook and valuation: "Over the past one year, gas production from the KG basin has declined significantly. Further, we do not expect any meaningful increase in the production at KG D6 over the coming two years. Hence, we expect utilization levels for GAIL's pipelines to remain low during FY2014. Moreover, a cap on the gas marketing margin (which is currently under review by the PNGRB) would remain an overhang on the stock. Hence, we maintain our Neutral rating on the stock," says Angel Broking research report.

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