MOSL: GAIL INDIA (Neutral)-EBITDA above estimate; Gas trading and Petchem shine
GAIL India: EBITDA above estimate; Gas trading and Petchem shine
(GAIL IN, Mkt Cap USD11.9b, CMP INR363, TP INR361, 1% Downside, Neutral)
1QFY19 EBITDA stood at INR22.4b (+18% YoY, +32% QoQ), above our estimate of INR21b, led by robust Gas trading and Petchem earnings. Adj. PAT rose 23% YoY (+25% QoQ) to INR12.6b (in-line) – the difference at PAT level declined due to lower other income of INR1.2b (est. of INR2.6b; +3% YoY, -57% QoQ) and a higher tax rate of 35% (est. of 33%).
Segmental analysis: Gas trading and Petchem shines
- Gas transmission EBIT grew 3% YoY (-1% QoQ) to INR7b. Gas transmission volume stood at 107mmscmd (+7% YoY, +1% QoQ) and implied tariff at INR1,347/mscm (+13% YoY, +8% QoQ).
- While petchem sales stood at 166kmt (+27% YoY, -13% QoQ), realization came in at USD1,455/MT (-8% YoY, +9% QoQ). EBIT stood at INR2.1b (+339% YoY, +468% QoQ), benefiting from lower gas cost and better realization.
- LPG/liq. HC sales stood at 310tmt (+6% YoY, -4% QoQ). Realization was USD502/mt (-1% YoY, -11% QoQ). EBIT stood at INR5.3b (flat YoY, -19% QoQ).
- Gas trading EBIT rose 64% YoY (+248% QoQ) to INR5.5b, led by trading volumes of 97mmscmd (+24% YoY, +9% QoQ) and trading margins of INR624/mscm (+32% YoY, +216% QoQ). Performance was boosted by start of US LNG volumes.
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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