MOSL: GAIL INDIA (Sell)-In-line EBITDA-Transmission/trading above est.-Petchem disappoints
​GAIL India: In-line EBITDA; Transmission/trading above est.; Petchem disappoints
(GAIL IN, Mkt Cap USD9.8b, CMP INR456, TP INR378, 17% Downside, Sell)
2QFY18 EBITDA stood at INR20.7b (in-line; +37% YoY, +9% QoQ), led by higher gas transmission/trading earnings, partly offset by lower petrochemical earnings. Reported PAT of INR13.1b (+42% YoY, +28% QoQ) was ahead of our estimate of INR12.2b, led by other income of INR2.9b (est. of INR2.4b; -13% YoY, +153% QoQ).
Segmental analysis: Transmission/trading above est.; Petchem disappoints
- Gas transmission volume stood at 106mmscmd (+5% YoY, +6% QoQ), led by increased offtake from power plants due to the lack of coal supply. Implied tariff stood at INR1,351/mscm (+25% YoY, +14% QoQ) due to increased share of higher tariff zone during the quarter. EBIT stood at INR8.5b (+33% YoY, +34% QoQ). We expect some softening in transmission volumes going ahead, with a decline in offtake from power plants as availability of coal supply increases.
- While petchem sales stood at 175k MT (+29% YoY, +34% QoQ), realization declined to USD1,277/MT (-14% YoY, -20% QoQ) due increased competition from domestic players. EBIT stood at INR888m (-43% YoY, +112% QoQ).
- Due to higher availability of rich gas, LPG/liq. HC sales stood at 333K MT (+19% YoY, +14% QoQ). Realization was USD417/MT (+16% YoY, -18% QoQ). EBIT stood at INR4.6b (+212% YoY, -14% QoQ).
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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