GAIL share price jumps 5% after strong jump in Q4 profit

Shares of GAIL (India) jumped over 5 percent in morning trade on BSE on June 25, a day after the company reported a 168.9 percent year-on-year growth in standalone profit for the quarter ended March 2020.

State-owned natural gas distributor GAIL India on June 24 reported a 168.9 percent year-on-year growth in standalone profit for the quarter ended March 2020, driven by tax write-back and strong operating performance.

Profit during the quarter increased to Rs 3,018.2 crore from Rs 1,122.23 crore in the same period last year.

However, revenue from operations fell 5.4 percent to Rs 17,753.12 crore compared to year-ago, hit by nationwide lockdown that began in late March.

Read more: GAIL Q4 profit jumps 169% to Rs 3,018 crore, lockdown hurts revenue

Brokerages found GAIL's March quarter scorecard impressive even as challenges persist.

As per CNBC-TV18, Morgan Stanley has an 'overweight' call on GAIL with a target price of Rs 153.

Morgan Stanley termed GAILS's quarterly numbers as strong performance amid the weakening macro environment which led to a good beat on most parameters.

Morgan Stanley said the company’s operations are near pre-COVID levels.

Credit Suisse said GAIL's numbers surprised positively on the higher margin for LPG and petchem segments.

Gas transmission segment performance was in-line with expectations. As per the foreign brokerage, Key to the stock is profitability on US LNG.

Credit Suisse believes the company's Q4 margin is not sustainable and it will shrink going forward.

"LPG cracks have now declined and Q4 margin is not sustainable. LPG margin should revert to the Rs 8,000-8,500/t from Rs 18,000/t," Credit Suisse said.

Shares of GAIL traded 4.49 percent up at Rs 105.90 on BSE around 10:35 hours.