GAIL Q2 Results Review - Strong Profits From Gas Trading Led To A Beat: Systematix

Systematix Research Report

GAIL India Ltd. delivered a robust result in Q2 FY24 led by strong trading margin and transmission volume which led to a sharp 43.5% QoQ jump in Ebitda, ahead of our estimates.

Further, lower interest cost and higher other income of Rs 56 billion (+109.6% QoQ) resulted in strong net profit of Rs 24 billion (up 70.3% QoQ/ 56.5% YoY).

Gas transmission volume increased by 3.4% QoQ to 120.3 million metric standard cubic metre per day led by higher offtake from power sector. Transmission tariff was flattish at Rs 2.2/standard cubic metre (versus Rs 2.24/scm in Q1 FY24) and the volume increase resulted in Transmission Ebitda of Rs 16.5 billion (22.1%/63.4% QoQ/YoY).

However, gas marketing volumes declined by 1.9% QoQ to 96.9 mmscmd but segmental Ebitda saw a massive 77% QoQ to Rs 19 billion led by increased volume sale at domestic margin with a better spread along with inventory gains.

Petchem division sales volume rose 3.7% QoQ to 168kt and Ebitda loss minimised during the quarter.

GAIL expects it become break even at Ebitda level in FY24 (loss of Rs 2.1 billion in H1 FY24).

Liquid hydrocarbon products segment saw a major contraction in earnings which dipped 98% QoQ to Rs 50 million owing to lower LPG prices and lower margins.

We largely keep our estimates unchanged and forecast a healthy 40%/33% compound annual growth rate in Ebitda/profit after tax during FY23-FY25E. We maintain our 'Buy' with an unchanged target price of Rs 135.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.