GAIL (India) Ltd. share price target

Improving commodity price outlook in a post Covid world to drive earnings. petrochemicals and LPG realization. Sharp recovery in commodity prices innew pipelines over next one year will augment volumes and profits. We had put the rating under review after a sharp run up in stock prices and now have...

Brent at USD69/bbl (May'21 average) has raised the price of oil-linked LNG to ~USD9/mmBtu (13% slope), similar to that of current spot LNG prices (which are also at ~USD9-10/mmBtu for July delivery). These make the pricing for US HH contracts favorable for GAIL. At the end of Dec'21, GAIL had started supplying gas (~2.3mmscmd totally) to various fertilizer plants ~0.8mmscmd to Mangalore Chemicals & Fertilizers, ~1mmscmd to the Ramagundam plant, and ~0.5mmscmd to the Gorakhpur plant. Company guided gas consumption at these plants to reach...

The new pipeline projects will boost the customer base, supported by growth in gas marketing and transmission and reduction in COVID impact on the operations. Hence, we reiterate our BUY rating on the...

Both physical, as well as the financial performance of the company, improved further across all major segments in Q3 as compared to Q2 Fy21. Natural gas transmission improved 4 per cent quarter-on-quarter, 8 per cent in gas marketing, 3...

The petchem segment reported volumes at 231 KT above our estimates of 210 KT. Higher volume and lower than expected costs led to EBIT of | 434.1 crore vs. our estimate of | 250.1 crore. LPG, LLH volumes were at 319 KT. Lower realisation and higher than expected costs led to lower than expected EBIT at | 282.7 crore. Going forward, on account of an increase in global crude oil prices, we expect realisations for LPG & petchem to improve, thereby increase in profitability. We expect petchem & LPG segment EBIT at...

GAIL (India) Q3FY21 EBITDA was largely in line while PAT was above our forecast led by higher than expected other income. Stellar performance by petrochemicals benefiting from highest-ever utilisation level at 114% was largely offset by third consecutive quarterly EBITDA loss at trading business. Gas transmission business volume remained flattish YoY (+4% QoQ) at 110.3mmscmd while LHC business saw a marginal dip at its EBITDA level. GAIL's management expect 5-7% rise in transmission volume in coming few years led by commissioning of new gas pipeline and demand from new fertiliser units in UP along with at least 110% utilisation level at its Petchem plant. Further, it expects stronger Q4FY21...

Owing to the huge demand supply mismatch across the globe on the path of normalization in the post COVID world, spot LNG prices and petchem margins are trending at multi-year highs. GAIL has reported concerns in its Gas trading and Petchem segment in 1HFY21, which are now likely to see some gains. GAIL has outperformed the Nifty by ~30% (rallying ~36%) over the last one-month...

Considering that the petrochemicals business is back to optimal levels & improvement in natural gas demand, the outlook remains positive. Hence, we maintain our BUY rating on the stock with a revised price target of Rs.108 based on SOTP valuation....

Gas transmission segment volumes were down 2.1% YoY at 106.4 mmscmd (our estimate: 105 mmscmd). Transmission volumes surpassed FY20 levels during the current quarter and are expected to improve further post commission of pipelines. Going ahead, we estimate 105.7 mmscmd and 118.5 mmscmd for FY21E and FY22E, respectively, on account of additional domestic gas from newer fields. The gas transmission EBIT at | 1021.2 crore was up 27.2% YoY and came in above our estimates. On the gas trading front, volumes fell 6.4% YoY to 88.6 mmscmd. Gas trading loss was at | 364...