Hold Gail (India); target of Rs 100: ICICI Direct

ICICI Direct's research report on Gail (India)

Gail India reported Q4FY20 results, which were better than our estimates. The profitability of gas transmission and natural gas trading was above our estimates on an operational basis while petchem and LPG/LLH results were below estimates. Revenues for the quarter fell 5.4% YoY to Rs 17753.1 crore. EBITDA came in at Rs 2475.4 crore (up 47% YoY), above our estimate of Rs 2008.4 crore. Reported PAT at Rs 3018.2 crore (up 168.9% YoY) was above our estimate of Rs 1341.7 crore mainly due to tax reversal as the company shifted to lower tax rate.

Outlook

We value Gail using the SOTP methodology, valuing the core business using DCF and EV/EBITDA multiple for other business segments with a HOLD recommendation and a target price of Rs 100.

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