Prabhudas Lilladher's research report on GAIL (India)
We raise our EPS estimates by 10/13.9% for FY25/26 factoring in increase in transmission and trading margins. GAIL reported better-than-estimated EBITDA of Rs45.3bn (up 27.3% QoQ, PLe: Rs35.6bn) while PAT came in at Rs27.2bn (up 25.1% QoQ, PLe: Rs23.2bn). Increase in earnings was on account of strong transmission and trading performance. Transmission volume grew 6.6% QoQ with 23% improvement in EBITDA. While trading volume remained flat QoQ, its EBITDA grew 40% QoQ. Going forward, we build in volume growth of 9%/6% CAGR in transmission/trading segment over FY24-26E.
Outlook
The stock is currently trading at 16.5x FY26 EPS and is expensively valued. We re-rate the stock from ‘Sell’ to ‘Reduce’ with a TP of Rs211, valuing it at 13x FY26 adj EPS of Rs12.9 and listed/unlisted investments at Rs43.
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