GAIL Q4 Results Review - One-Offs Mar Quarter; Robust Guidance Maintained: Motilal Oswal

Motilal Oswal Report

GAIL India Ltd. reported an Ebitda of Rs 36 billion in Q4 FY24, 4% below our estimate, even as profit after tax came in 19% below our estimate. The miss was due to a weakerthan-expected performance in the trading segment, a one-off depreciation related charge of Rs 1.7 billion, and lower-than-expected other income.

This was partly offset by a strong performance in the petchem and LPG segments, with Ebit coming ahead of our expectations.

GAIL anticipates a robust domestic gas demand, projecting gas transmission volumes to reach 132 million metric standard cubic metre per day by end-FY25 and 142 mmscmd by end-FY26.

For the trading segment, management guided an Ebit of Rs 40-45 billion, while for the petchem segment, it remained hopeful of a healthy FY25 profitability amid weaker spot LNG prices.

The key takeaways from the analyst meet:

1. the quality of guidance has significantly improved and GAIL remains on track to achieve the guided volumes and profitability in transmission and trading,

2. the strength of improvement in petchem profitability has surprised us/street, and

3. key projects such as PDH-PP remain on track for completion as per timelines.

We value the core business at 13 times FY26E adjusted earnings per share of Rs 15. Adding the value of listed and unlisted investments of Rs 40, we arrive at a target price of Rs 235. Reiterate Buy.

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