Buy GAIL; target of Rs 147: Motilal Oswal

Motilal Oswal's research report on GAIL

We attended GAIL’s analyst meet in Delhi on 22nd March, 2023. Below are the key highlights from the meeting: Management highlighted that owing to supply disruptions from GMTS and recordhigh LNG prices, performance was adversely impacted across all segments in FY23. The company’s PATA plant was operating at just 50% capacity and had to shut down briefly in Oct’22. However, the supply situation now seems to be improving with Sefe (formerly GMTS) nominating two cargos each in March & April. Additionally, GAIL purchased 122mmscmd of gas from IGX (at USD16-17/mmBtu) and will also be bringing eight LNG cargos from the US.

Outlook

Recently approved tariff hike, LNG prices cooling off to ~USD12/mmBtu, and improvement in gas supply should improve performance going forward. Hence, we reiterate our BUY rating with a TP of INR147.