MOSL: MOrning India (30/August/19): 1. GAIL India (Concerns about US HH contracts to subside soon); 2. Automobiles (Recovery elusive, inventory correction continues)
MOrning India (30/August/19): 1. GAIL India (Concerns about US HH contracts to subside soon); 2. Automobiles (Recovery elusive, inventory correction continues)
Today’s top research idea
GAIL India: Concerns about US HH contracts to subside soon
- Our discussions with various industry experts suggest that while the separation of the transmission segment from the marketing segment is inevitable, the best alternative is to carve out the transmission segment as another subsidiary of GAIL.
- We expect EBIDTA CAGR of ~9% over FY19-21, with FY21 EV/EBITDA of 3.1x. Transmission segment will likely remain the major contributor to EBIDTA (>35% share), with volumes estimated to grow by ~117mmscmd in FY21.
- The stock trades attractively at 8.6x FY21E EPS of INR14.9 and PBV of 1.1x FY21E BV of INR117. We value GAIL at 8x FY21E EPS adjusted for other income and then add value of investments. With a target price of INR150, we reiterate our Buy rating.
Piping hot news
Essel sells 205 MW of solar assets to Adani for Rs 1,300 crore
The debt-ridden Essel Group, controlled by Subhash Chandra, has entered into an agreement with Adani Green Energy to sell its 205-MW operating solar assets at an enterprise value of Rs 1,300 crore. On March 8, FE had reported the company was in talks with Adani and CPPIB for sale of its 685-MW solar portfolio on a piecemeal basis. The company is further working to close the divestment of additional 480-MW solar asset portfolio, the company said in a statement.
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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