Reduce Gail (India); target of Rs 90: ICICI Direct

ICICI Direct's research report on Gail (India)

Gail India reported a weak set of Q1FY21 numbers on account of a weak performance in gas trading, petchem and LPG/LLH segments. Revenues for the quarter fell 34% YoY to Rs 12086.9 crore, lower than our estimate of Rs 14464.7 crore mainly due to less-than-expected volumes and realisations in gas trading. EBITDA came in at Rs 622.6 crore (down 72.4% YoY), below our estimates of Rs 1383.4 crore. Subsequently, reported PAT was at Rs 255.5 crore (down 80.2% YoY) and was below our estimate of Rs 837.3 crore.

Outlook

We value Gail using the SOTP methodology, valuing the core business using DCF and EV/EBITDA multiple for other business segments and change our recommendation from HOLD to REDUCE with a revised target price of Rs 90.

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