GAIL (India) Ltd. share price target

GAIL India (GAIL) has delivered another strong performance in Q2FY24, with EBITDA up 2x YoY to INR 34.9bn and PAT up 56% YoY to INR 24bn, well ahead of our EBITDA/PAT estimates of INR 27bn/INR 18bn. Stronger transmission earnings (buoyed by 12mmscmd YoY and 4mmscmd QoQ uptick in volumes), 40% higher tariff YoY (due to new integrated tariffs being applied from 1st Apr’23) and 4.9x YoY improvement in trading EBITDA (up 76% QoQ) helped offset continued weakness in petrochemical and muted LPG earnings.

The prospects for GAIL India (GAIL) continue to strengthen and may drive a sustained period of outperformance over the next 2-3 years, we believe. Growing domestic gas supplies, LNG liquefaction capacity and expectations of relatively moderate pricing of the same, normalisation of LPG prices and some likely improvement in petrochemical segment imply earnings from each key segment should steadily improve over the next 2-3 years.

GAIL India (GAIL) has delivered a strong quarter sequentially in Q1FY24, with EBITDA up 5x to INR 24.3bn and PAT up ~2x QoQ to INR 14.1bn, well ahead of I-Sec estimates of INR 17.9bn EBITDA/ INR 10.3bn PAT, respectively. Stronger transmission earnings, buoyed by 8mmscmd uptick QoQ in volumes, 45% higher tariff QoQ (due to new integrated tariffs being applied from 1.4.23) and 2x QoQ improvement in trading EBITDA, helped offset continued weakness in petrochemical and muted LPG earnings.

GAIL India (GAIL) has delivered a muted Q4FY23, with adjusted EBITDA of Rs4.9bn (-87% YoY, I-Sec est Rs14bn) and recurring PAT of Rs7.4bn (-72% YoY, I-Sec est Rs8.2bn). Reported EBITDA/PAT of Rs3.1bn/6bn was impacted by write-offs related to the potential re-routing of the KMBPL (Rs1.1bn) and legal settlement of an old case (Rs70mn).