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Nirmal Bang Report
GAIL India Ltd. standalone profit after tax at Rs 24.05 billion was a 20.4%/34.6% beat versus our/street estimate. Revenue was a miss of 5.3%/7.6% versus our/street estimate. Ebitda was 28.8% above our estimate and Ebitda margin was a beat by 291 bps versus our estimate.
Segment Ebitda: Gas marketing (trading) saw a beat of 124%; gas transmission saw a miss of 5.6%. Liquefied petroleum gas and hydrocarbons segment had a loss of Rs 1.4 billion versus our profit estimate of Rs 1.64 billion while petchem suffered a greater loss of Rs 660 million versus our's loss estimate of Rs 24 million due to the weak prices/demand and excess inventory.
We have raised FY24E by 2.6% based on Q2 FY24 run-rate while also raising FY26E a tad on the back of an increase in gas trading.
We have raised our SOTP-based target price a tad to Rs 151 using discounted cash flow method for gas and LPG transmission and unchanged enterprise value/Ebitda for other segments on September 25E (rolled over recently).
We remain positive about GAIL's growth prospects, supported by favorable tariff increase, healthy volume growth in gas transmission and bright outlook for gas marketing.
Policy enablers, gas demand compound annual growth rate of 5-6% and easier gas availability/lower gas costs are added catalysts. Maintain 'Buy'.
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