IDFC Securities - GAIL (India) Limited (GAIL) GAILs Q3FY19 results (Outperformer) - Another strong quarter

Report

IDFC Securities

GAIL's Q3FY19 results (Outperformer) - Another strong quarter

Q3FY19 result highlights

GAIL Q3FY19 EBITDA/PAT of Rs26.7/16.8bn grew 25/22% yoy respectively well ahead of IDFCe EBITDA/PAT of Rs24.3/14.8 and also consensus estimates of Rs15.8bn.
PAT was driven by strong earnings from natural gas transmission, LPG + LHC and trading segments offsetting the lower earnings from the Petchem segment. 9M EBITDA/PAT of Rs76.2/47.5bn was up 28/31% yoy.
EBIT of Rs23bn (+29% yoy, IDFCe Rs20.6bn). Beat vs estimates driven by strong beat from higher transmission EBIT, strong LPG + LHC segment and trading segment earnings.
Trading EBIT of Rs6.8bn (~2x yoy, IDFCe Rs4.8bn) driven by higher US LNG cargoes and favourable HH differentials with Asian LNG.
LPG + LHC EBIT of Rs8.3bn (+27% yoy, IDFCe Rs8.1bn) and Petchem EBIT of Rs297mn (-68%, IDFCe Rs697mn).
Gas transmission/trading volumes at 108/96 mmscmd, LPG+LHC volumes at 342kt, Petchem volumes at 180kt.

Key positives: Strong performance across segments except Petchem

Key negatives: Muted Petchem EBIT due to planned shutdown and lower realisations

Impact on financials: We raise FY19/20E EPS by 9/4%. However rollover to lower FY21E multiples reduces our TP to Rs445/sh. FY21E EPS of Rs31/sh introduced with this note

Valuations & View

Strong growth across segments and a favourable operational scenario has driven a 31% yoy growth in PAT for 9MFY19. We believe the momentum will be sustained over FY20-21E as well, with gradual growth in gas/Petchem volumes, margins improvement in petchem and Transmission and sustenance of earnings in the LPG+LHC segment. This should propel a CAGR of 29% EPS CAGR over FY18-21E, with ROE/ROCE expected to improve 390bps over the period. Current valuations of 8.4x FY21E EPS (net of investment value of Rs70/sh) do not reflect these strengths, making these levels attractive to Buy. Reiterate Outperformer with a target price of Rs445.

06/02/2019 8 EN

Underlying

GAIL (India) Limited

Gail India is engaged in the natural gas, liquified natural gas ("LPG"), liquid hydrocarbons and petrochemicals exploration and production and city gas distribution through its natural gas trunk pipelines covering a length of around 7000 km and over 1900 km of LPG pipeline transmission network. Co. is also engaged in the telecom business with the network of approx. 13,000 km throughout India. Co. operates six primary business segments: Transmission Services, Natural Gas Trading, Petrochemicals, LPG and other Liquid Hydrocarbons, GAILTEL and City Gas Distribution.

See profile

INE129A01019 National Stock Exchange of India India

Provider

IDFC Securities

IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.

See profile

Other Reports on these Companies

Motilal Oswal

MOSL : GAIL: Strong showing by the Gas Trading segment; supply from Gazprom remains a concern in 2QFY23

. GAIL: Strong showing by the Gas Trading segment; supply from Gazprom remains a concern in 2QFY23 (GAIL IN, Mkt Cap USD7.7b, CMP INR140, TP INR176, 26% Upside, Buy) GAIL reported a 31%/33% beat on EBITDA/PAT in 1QFY23 as strong gains in the Trading business offset other weak segments. Operating performance in the Transmission and Petrochemicals segment decreased on a YoY and QoQ basis. Gazprom triggered the force majeure clause on ~2.5mmt of volume (~14mmt of its total LNG portfolio), which will ultimately mean higher gas prices. As a few consumers may not be able to afford higher gas p...

EUR 120.00

August 5, 2022 August 5, 2022 10 EN

TheScreener

GAIL (INDIA) is downgraded to Slightly Positive due to increased risk

The independent financial analyst theScreener just slightly lowered the general evaluation of GAIL (INDIA) (IN), active in the Pipelines industry. As regards its fundamental valuation, the title confirms its rating of 4 out of 4 stars. Its market behaviour, however, has slightly deteriorated and can be now qualified as moderately risky. This risk increase, even if marginal, forces theScreener to slightly downgrade the title, which now displays an overall rating of Slightly Positive. As of the analysis date February 18, 2022, the closing price was INR 140.85 and its potential was estimated at I...

Free Trial

February 19, 2022 February 19, 2022 1 EN

Independent Investment Research

Monthly LMI Update Independent Investment Research

Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked. This compares to the total dividends of 5 cents per share in FY20. The Board has confirmed that, in...

August 6, 2021 August 6, 2021 10 EN

GMR Infrastructure's Q3FY20 results (Outperformer) - Air traffic growth improved at the airports; deleveraging process gains momentum

Q3FY20 result highlights Airport traffic recovered in Q3FY20 with Delhi Airport witnessing a 7% yoy growth in passenger (vs 5% decline in H1FY20) and Hyderabad Airport reporting a 9% growth in passenger traffic (vs 4.9% in H1FY20). Note that traffic was subdued in H1 because of Jet Airways shutdown of operations. GMR Infrastructure (GMR) revenues grew by 11% yoy to Rs16.7bn aided by strong non aero revenues growth of 12% and 138% yoy growth in rental revenues. EBITDA for airport business was Rs6.7bn, +28% yoy Energy Business - Warora and Kamalanga PLF for Q3FY20 was 81% (vs 75% in Q3FY1...

February 24, 2020 February 24, 2020 12 EN

Bhoomika Nair

Bhoomika Nair

Ambuja Cement's Q4CY19 results (Outperformer) - In line; cost efficiencies at play

Q4CY19 result highlights Adj PAT +54% yoy to Rs4.55bn: was above estimates on lower tax (shifted to new tax regime) while operational performance was in-line. Volume increased 6.7% yoy: to 6.54mn tons led by pickup in demand in North and East, growing ahead of industry (mkt share gains). Realisations +2.7% yoy: to Rs4795/t due to sharp price hikes across regions in 1HCY19. This was further augmented by 14% yoy growth in premium products. Hence, revenue was up 9.5% yoy to Rs31.4bn. However, on a qoq basis realisations fell by Rs198/t (-4% qoq) as prices have corrected across regions from p...

February 24, 2020 February 24, 2020 6 EN

Nitin Agarwal

Nitin Agarwal

Event update: Aurobindo Pharma (Outperformer) - Unit IV receives EIR; positive outcome

Event Unit IV has received an Establishment Inspection Report (EIR) with Voluntary Action Initiated (VAI) status by USFDA Key highlights With the receipt of this status, FDA will now start granting new ANDA approvals from this facility. Notably, in mid-November, the USFDA had conducted a surprise inspection for nearly 10 days in Unit 4, post which it had issued 14 observations. While our read of the observations suggested that most of these were primarily procedural, market has been concerned around potential escalation of the issues into an OAI which, in turn, would have impacted revenu...

February 24, 2020 February 24, 2020 4 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN