Prabhudas Lilladher's research report on GAIL (India)
We change GAIL India (GAIL)’s FY23/24/25E earnings by -2%/-7%/+6% to factor in 1) higher than expected pipeline tariff revision of ~33% vs earlier expectation of ~20% (even as we lower our transmission volumes) 2) 22%/49% higher gas trading earnings to Rs25.4/27.4bn and 3) lower petrochemicals realization by USD200/100/ton for FY24/25E. After a turbulent year due to volatile gas prices, softening of spot LNG prices to USD12-13/mmbtu (Aug 22 highs of USD70) and domestic gas price to USD6.5 (currently USD8.5) augur well for GAIL’s earnings visibility, however, global recessionary pressures can still impact petchem and LPG profitability, in our view.
Outlook
We reiterate ‘BUY’ with revised PT of Rs118 (Rs123) based on 7x EV/EBIDTA FY24E.
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