Sharekhan's research report on GAIL (India)
Standalone PAT of Rs. 2,843 crore, up 18% q-o-q was 29% above our estimate led by sharp earnings beat from gas trading/petchem segments, higher other income and rise in interest cost/tax rate offsetting slightly subdued gas transmission. Petchem segment turned EBITDA positive led by higher utilization, better absorption of fixed cost and lower gas cost. GAIL trading benefited from continued strong marketing margins, while LPG-LHC EBITDA growth was led by higher realisations. Management upped FY24 gas marketing EBITDA guidance to Rs. 5,500 crore and expect it to be at Rs. 4,000 crore/Rs. 4,500 crore for FY25/FY26. GAIL aims for reasonable petchem profits in FY25; strong gas transmission volume growth to continue.
Outlook
We reiterate our Buy rating with a revised PT of Rs. 200 given our expectation of strong earnings growth and reasonable valuation of 7.7x FY26E EV/EBITDA, 10x FY26E EPS and 1.5x FY26E P/BV.
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