Motilal Oswal - GAIL (India) Limited (GAIL) MOSL: GAIL INDIA (Neutral)-The long-awaited final trigger disappoints

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Motilal Oswal

Swarnendu Bhushan

EUR 120.00 For Business Accounts Only

MOSL: GAIL INDIA (Neutral)-The long-awaited final trigger disappoints

GAIL India: The long-awaited final trigger disappoints

(GAIL IN, Mkt Cap USD10.3b, CMP INR316, TP INR351, 11% Upside, Neutral)

The Petroleum & Natural Gas Regulatory Board (PNGRB) announced an integrated tariff hike for GAIL India’s (GAIL) HVJ and HVJ upgradation pipelines to INR41.1/mmbtu (proposed: INR97.0/mmbtu).
The regulator-approved tariff indicates an increase of only ~4% from the current weighted average margin of INR39.7/mmbtu. This comes in as a big disappointment as the street was expecting a much higher tariff hike of ~25%. We were considering it as the only positive medium-term trigger for the stock.
Given the aforementioned disappointment, along with rising concerns on other business segments, we reiterate our Neutral rating with a target price of INR351.

07/06/2019 1 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.

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INE129A01019 National Stock Exchange of India India

Provider

Motilal Oswal

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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Analysts

Swarnendu Bhushan

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MOSL: GAIL INDIA (Neutral)-The long-awaited final trigger disappoints

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

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

Monthly LMI Update Independent Investment Research

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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