GAIL India Q2 Results Review - Outlook Remains Positive; Upgrade To Buy: Systematix

Systematix Research Report

GAIL India Ltd.’s operational performance for Q2 FY25 aligns with our estimates while lower depreciation, higher other income, and lower effective tax rate led to a 19% beat in net profit. Ebitda experienced a 17% sequential decline (+7% YoY) to Rs 37.5 billion, primarily driven by a 34%/8% decrease in trading and transmission profit, which was partially offset by a substantial 126%/4% sequential growth in Petrochem and LHC profits.

Gas transmission volumes remained relatively stable QoQ at 130.6 million metric standard cubic metre per day (+8.6% YoY), while the effective tariff decreased by 2.2% to Rs 2.13/scm. Ebitda/scm witnessed a 20% decline to Rs 1.08/scm due to elevated spot LNG prices.

Gas trading volumes contracted by 3% QoQ to 96.6mmscmd, owing to reduced offtake from the power sector. Segmental Ebitda plummeted by 48% QoQ (-42% YoY) to $0.3/metric million British thermal unit, attributable to a negative spread between HH and Brent.

Petrochemical Utilization levels surged to 115% as sales volumes expanded by 34% QoQ (+35% YoY) to 226kt. Favorable gas mix and improved margins contributed to a 127% QoQ increase in segmental Ebitda to Rs 2.8 billion, better than estimates.

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