Buy Gail India Ltd For Target Rs. 160 - ICICI Direct
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Gas trading segment continues to drive earnings
About the stock: Gail India is a gas utility company with various business segments such as gas transmission & trading, LPG, LLH and petrochemicals.
* It operates a natural gas pipeline network of 14500 km as of end of FY22
* Gail also has a presence in CGD sector directly and via associate companies
Q1FY23 Results: Results were better-than-expected on account of higher profitability in the gas trading segment.
* Revenue was up 116.1% YoY to | 37562.5 crore due to higher realisation
* While gas transmission and petchem segment performance was weaker than anticipated, other segments- gas trading and LPG/LLH reported better than expected profit
* Subsequently, EBITDA was | 4365.7 crore, up 81.1% YoY (our estimate: | 3009.2 crore). Reported PAT was at | 2915.2 crore, up 90.5% YoY (our estimate: | 2017.1 crore)
What should investors do: The gas trading outlook remains positive in the near term taking into account current LNG price trend that will offset weakness in transmission/trading and petchem volume trend.
* We maintain our BUY rating on the stock
Target Price and Valuation: We value Gail at | 160/share based on SoTP method
Key triggers for future price performance:
* Pick-up in gas transmission volume
* Gas trading is expected to report healthy gains in the near term due to favourable spot LNG prices ? Consistent dividend payout
Alternate Stock Idea: Apart from Gail, in our oil & gas coverage we also like IGL.
* Indraprastha Gas (IGL) is one of India’s leading CGD companies, which primarily operates in NCT of Delhi and will benefit from stricter environmental regulations in Delhi. Continued capex, newer areas and CNG conversion of vehicles will support further volume growth
BUY with a target price of | 440
To Read Complete Report & Disclaimer Click Here
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer
