Prabhudas Lilladher's research report on GAIL India
GAIL India (GAIL IN) has initiated a study on listing of its wholly owned subsidiary GAIL Gas Ltd (GGL). This literal move towards adulthood, nearly eighteen years after it was founded in 2008, is bode to provide a strong fillip to GAIL through Rs11/share accretion even post 25% holding company discount. With a total of 16 geographical areas (GAs) in standalone and additional 9 through JVs, it’s total sales volume stood at 7.3mmscmd in FY25. Key areas of operation include Bengaluru, Sonepat, Dewas etc. Additionally, we believe that the downward revisions in transmission volume are over for GAIL. With 8-10mmscmd of rise in transmission volume in FY27 YoY, we expect EPS of Rs16/17 in FY27/28.
Outlook
The stock is trading at 11.5x FY27 EPS. Valuing standalone at 11x FY27/28 EPS and adding the value of investments, we arrive at a target price of Rs211 and reiterate Buy on the stock.
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