Q2 Results: GAIL India’s Profit Beats Estimates Aided By Gas Trading Business

GAIL (India) Ltd.'s profit for the quarter ended September rose, beating estimates, on the back of higher revenue from the natural gas marketing business.

Net profit of the state-run gas utility rose 56 percent sequentially to Rs 1,963 crore in the July-September quarter, according to its exchange filing. That compares with Rs 1,518 crore consensus estimate of analysts tracked by Bloomberg.

The revenue rose 11.4 percent quarter-on-quarter to Rs 19,275 crore—against Rs 17,827 crore estimated. GAIL's earnings before interest, tax, depreciation and amortisation rose 29 percent over the previous quarter to Rs 2,928 crore, while the operating margin expanded 160 basis points to 15.2 percent. The natural gas trading business revenue rose 11.5 percent sequentially to Rs 15,651.9 crore.

“Going forward, a similar performance will depend on commodity prices and tariff revisions on the remaining pipelines for the transmission business,” said Mayuresh Joshi, fund manager at Angel Broking. The performance of the petrochemical segment, he said, will be determined by the utilisation levels and asset turnover in their Pata plant in Uttar Pradesh.

Other Highlights

• Revenue from the petrochemicals business rose 9.8 percent sequentially to Rs 1,772.18 crore.
• In the transmission services business, natural gas revenue rose 16.72 percent to Rs 1,530.8 crore, while LPG rose 8 percent to Rs 152.38 crore.
• The natural gas marketing business was aided by higher LNG volume and price.
• Transmission EBIT margin expanded to 57 percent from 53 percent in the preceding quarter.
• Natural gas marketing EBIT margin expanded to 6.7 percent from 3.9 percent.
• Petrochemical segment's EBIT margin contracted to 9.4 percent from 12.9 percent.
• LPG segment EBIT margin expanded to 55.7 percent from 49.4 percent.

GAIL's transmission business was aided by the Petroleum and Natural Gas Regulatory Board's move to increase pipeline tariffs.

The stock declined 0.2 percent to Rs 369 apiece after the earnings announcement.