MOSL: GAIL INDIA (Sell)-In-line EBITDA-Petchem impacted by plant shutdown
​GAIL India: In-line EBITDA; Petchem impacted by plant shutdown
(GAIL IN, Mkt Cap USD9.8b, CMP INR364, TP INR346, 5% Downside, Sell)
- GAIL reported 1QFY18 EBITDA of INR18.9b (est. of INR18.6b; +21% YoY, +25% QoQ), as Petrochemical earnings declined due to planned maintenance shutdown. Reported PAT of INR10.3b (+21% YoY, -2% QoQ) was lower than our estimate of INR10.9b, led by lower other income of INR1.2b (est. of INR2.3b; -15% YoY, -77% QoQ). Profitability for the quarter benefited from the reversal of INR1.6b on account of provision toward gratuity & HRA.
- Segmental analysis: Transmission/Trading above est.; Petchem impacted by plant shutdown
- Gas transmission volume stood at 100mmscmd (+4% YoY, -2% QoQ). Adjusting for one-offs, implied tariff stood at INR1,187/mscm. Unadjusted EBIT stood at INR6.4b (+15% YoY, +22% QoQ).
- Petchem utilization stood at ~54% due to planned shutdown. Sales stood at 131k MT (+19% YoY, -30% QoQ). Realization was USD1,570/MT (-22% YoY, -13% QoQ). EBIT stood at INR419m (-55% YoY, -38% QoQ).
- Due to higher availability of rich gas, LPG/liq. HC sales stood at 292K MT (+20% YoY, +6% QoQ). Realization was USD507/MT (+30% YoY, -1% QoQ). EBIT stood at INR5.3b (+148% YoY, +6% QoQ).
- Gas trading EBIT declined 23% YoY (+21% QoQ) to INR3.2b due to partial conversion of short-term contracts to long-term contracts.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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