Ashish Jagnani neutral on GAIL India

Ashish Jagnani, Oil & Gas Analyst at UBS told CNBC-TV18, "We have been cautious on GAIL India. The stock has done well in the interim but off-late there has been a lot of uncertainty that has come back. It’s on the subsidy part, they have been reassigned subsidy; there is not too much clarity as to how they go about going forward on that. Second, one more concern which we think is evolving for GAIL is them being made to do a lot of pipeline capex while their existing pipelines are still under utilised, making them to do additional capex on new pipeline does remain a risk and lastly, we have started to see some more news flow about them being made to cut some tariffs or gas supply to power, all of which is little bit of an overhang at this point.”

“You see another 10 percent odd correction and that would be a good time to look at it because from a long-term strategy it’s a best consumption play on rising gas. Consumption in India which we think will happen but it’s pushed back with all gas production taking a little longer to recover. At this point in time we are neutral on the stock; we think you probably need a better valuation to get into it from a slightly longer term perspective,” he added.