IDFC Securities - GAILs Q2FY19 results (Outperformer) - Going from Strength to Strength

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IDFC Securities

GAIL's Q2FY19 results (Outperformer) - Going from Strength to Strength

Q2FY19 result highlights

GAIL adjusted EBITDA/PAT of Rs27/18bn was up 30/38% yoy respectively, helped by a strong performance across segments. Results well ahead of IDFCe EBITDA/PAT of Rs22.9/13.4bn.
Reported EBITDA/PAT of Rs29.3/19.6bn (+41/50% yoy) was helped by one time provisions of Rs1bn (Q1 transmission tariff revision) and Rs1.3bn (previous trading outstanding received this qtr).
EBIT of Rs23.5bn (+36%oy, IDFCe Rs19bn). Beat vs estimates driven by strong beat in gas trading, higher transmission EBIT and higher petchem earnings.
Trading EBIT of Rs9.1bn (Adj for Rs1.3bn one time gain) the highest ever driven by higher US LNG cargoes and favourable HH differentials with Asian LNG
LPG + LHC EBIT of Rs7.7bn (+67%, in line) and Petchem EBIT of Rs1.67bn (+89%, IDFCe Rs1.4bn).
Gas transmission/trading volumes at 106/96 mmscmd, LPG+LHC volumes at 338kt, Petchem volumes at 195kt.

Key positives: Strong performance across segments

Key negatives: muted volume growth for gas transmission

Impact on financials: We raise FY19/20E EPS by 10/5%. TP raised to Rs460/sh.

Valuations & View

Strong growth across segments and a favourable operational scenario has driven a 38% yoy growth in PAT for H1FY19. We believe the momentum will be sustained over H2 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 27% EPS CAGR over FY18-20E, with ROE/ROCE expected to improve 390bps over the period. Current valuations of 10.1x FY20E 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 Rs460. â€‹

13/11/2018 9 EN

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.

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GAIL's Q2FY19 results (Outperformer) - Going from Strength to Strength

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

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

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

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