MOSL: GAIL INDIA (Neutral)-Trading and petrochem suffer
GAIL India: Trading and petrochem suffer
(GAIL IN, Mkt Cap USD10.4b, CMP INR332, TP INR346, 4% Upside, Neutral)
Gas trading and petrochem segments suffered, while LPG and liquid HCs performed better than expectations, resulting in EBITDA of INR26.7b (our estimate: INR26.1b; +36% YoY, -9% QoQ). Adj. PAT increased 36% YoY (-13% QoQ) to INR17.1b (our estimate: INR16.7b).
Segmental analysis: Gas trading and petrochem disappoint
- 2QFY19 included one-off gain of INR1.33b in the trading segment. With sales volume of 96mmscmd (+9% YoY, flat QoQ), gas trading EBIT stood at INR6.8b (+98% YoY, -35% QoQ) in 3QFY19.
- Petrochem sales stood at 173tmt (-2% YoY, -5% QoQ). The company was stabilizing its plant to produce metallocene films, a premium product. Since Jan’19, the plant is running at full capacity. EBIT declined 68% YoY (-82% QoQ) to INR297m, also due to a decline in benchmark product deltas.
- LPG and HC sales stood at 342tmt (+5% YoY, +1% QoQ). EBIT stood at INR8.3b (+27% YoY, +9% QoQ).
- Gas transmission volumes stood at 108mmscmd (-1% YoY, +2% QoQ). Implied tariff was at INR1,486/mscm (+12% YoY, +1% 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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