MOSL: Morning India (8/June/17)-1. GAIL India (A case for lower PE)-2. Voices (Demand revival in the offing)-3. EcoScope; 4. Financials
​MOrning India (8/June/17): 1. GAIL India (A case for lower PE); 2. Voices (Demand revival in the offing); 3. EcoScope; 4. Financials
Today’s top research idea
- ​GAIL India: A case for lower PE; US contracts pose threat of losses; downgrading to Sell
- GAIL may face challenges to find customers for the 5.8mmtpa import contracts it has signed with US companies.
- Threat of losses on US shale gas import contracts looms large and may wipe out ~20% of EBITDA for each USD1/mmBtu loss. In the current pricing environment, US shale would be ~USD2/mmBtu more expensive than prevailing spot prices in Asia-Pacific. Incremental benefits from transmission, trading and petrochemicals are limited.
- Led largely by the petrochemicals and LPG segments, we expect EBITDA to increase by 24% in FY18. However, RoE at 11.7% and RoCE at 10.0% would still remain ~5% lower than a decade ago due to increased balance sheet size. We revise our stock rating to Sell. Our target price of INR357 implies 10% downside.
Piping hot news
- ​Home loans set to get cheaper as RBI eases norms for banks
- The Reserve Bank of India (RBI) on Wednesday made it possible for banks to lend more to home buyers, and at lower interest rates, in a move that should benefit customers as well as real estate developers.
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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