YES Securities' research report on GAIL (India)
GAIL reported 1QFY24, significantly below estimates, with adjusted operating profit at Rs 243bn (-44% YoY; +692% QoQ). Gas transmission segment reported a pre-tax profit of Rs 102bn. GAIL’s p/l tariff was recently (Mar’23) revised upwards to Rs 58.6/mmbtu, however GAIL is of the view that tariffs need further upward to Rs 68.55/mmbtu. Many pipelines are getting commissioned in FY24 which will result in increase in volumes. Current transmission volumes are 116mmscmd, post completing of projects this is to rise to 123mmscmd in FY24 and another 15mmscmd by FY26. Capex during the quarter was Rs 24bn. Working on transition to sustainable future with projects in green hydrogen, renewables. Volumes increased due to increase in RLNG sales, resumption of supply & decreased oversea volumes. Initiatives taken to reduces the losses of petrochemical segment. Going ahead, with moderation in domestic gas and LNG prices, the business for GAIL appears to be improving across segments. Maintain BUY.
Outlook
We maintain BUY rating on GAIL, with revised Mar’24 TP of Rs 157/sh.
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