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Dolat Capital Report
GAIL India Ltd.'s Ebitda of Rs 35 billion (+98% YoY, +44% QoQ), 62% above our estimates, Ebitda doubled YoY due to-
natural gas trading Ebitda margins $0.74/metric million British thermal unit near record high;
natural gas transmission gas cost the lowest ($0.3/mmbtu) in last four quarters, despite administered price mechanism gas allocations cut to 0.2 million metric standard cubic metre per day;
transmission realised tariff was much higher of Rs 66.3/mmbtu versus integrated tariff of Rs 58.6/mmbtu (due to zonal revenue entitlement), transmission Ebitda/unit is at record high of $0.5/mmbtu.
Despite softer liquefied natural gas prices and higher utilisation (79%) of the petrochem plant, petrochem reported ~Rs 0.3 billion losses at Ebitda due to weak price realisation. Net Profit of Rs 24 billion (+56% YoY, +70% QoQ), 60% above our estimates.
Considering the rising gas demand in India, we expect GAIL's transmission volume to clock 9% compound annual growth rate over FY23-FY26E.
We maintain an 'Accumulate' rating with a revised target price of Rs 133 (versus earlier Rs 130).
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