Published on 16/09/2019 12:15:19 PM | Source: Reliance Securities Ltd

Buy GAIL India Ltd For Target Rs.155 - Reliance Securities

Posted in Broking Firm Views - Short Term Report| #Gail India Ltd #Oil and Gas Sector #Trading Report #Reliance Securities Ltd

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* We believe that gas pipeline segment will provide stable earnings mainly due to revised pipeline tariffs and improving gas transmission volume.

* In a Lower spot LNG price environment, the company’s gas trading segment likely to make higher margins in 2QFY20.

* We believe that GAIL’s utility business will continue to get higher valuation multiples on stable earnings.

* Petrochemical plant was shut down for preventive maintenance in 1QFY20. Now, the plant has been restored to normal operations at PATA, which produced a record volume of 78 TMT in Jul’19.

* The Company expects the plant to operate at full capacity (100% utilisation level) in remaining period of the fiscal.

* At CMP, the stock trades at 5.4x of FY21E EBITDA, which is at discount to its long-term average of 7.4x. We recommend “BUY” on the stock with Target Price of Rs155.


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