MOSL: GAIL INDIA (Sell)-In-line EBITDA-LPG/HCs above est.; Trading/Petchem disappoint
GAIL India: In-line EBITDA; LPG/HCs above est.; Trading/Petchem disappoint
(gail IN, Mkt Cap USD12.2b, CMP INR465, TP INR338, 17% Downside, Sell)
3QFY18 EBITDA stood at INR19.7b (in-line; +16% YoY, -5% QoQ), led primarily by higher contribution from LPG and HCs. Other income of INR3b was much higher than our estimate (+1% YoY, +3% QoQ). Effective tax rate of 32.1% was lower than our estimate of 34%, which, combined with higher other income, resulted in PAT of INR12.6b (+28% YoY, -4% QoQ).
Segmental analysis: Transmission volume at 109mmscmd
- Gas transmission volume stood at 109mmscmd (+6% YoY, +3% QoQ), led by increased offtake from power plants due to the lack of coal supply. Implied tariff stood at INR1,325/mscm (+9% YoY, -2% QoQ) due to increased share of higher tariff zone during the quarter. EBIT stood at INR6.3b (+8% YoY, -21% QoQ).
- While petchem sales stood at 176kmt (+21% YoY, +1% QoQ), realization declined to USD1,265/MT (-11% YoY, -1% QoQ). EBIT stood at INR940m (-30% YoY, +6% QoQ).
- Due to higher availability of rich gas, LPG/liq. HC sales stood at 326tmt (+10% YoY, -2% QoQ). Realization was USD557/mt (+40% YoY, +34% QoQ). EBIT stood at INR6.6b (+76% YoY, +44% QoQ).
- Gas trading EBIT rose 14% YoY (-19% QoQ) to INR3.4b, led by trading volumes of 88mmscmd (+6% YoY, +4% QoQ) and trading margins of INR423/mscm (+7% YoY, -22% 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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