PremiumGovernment-owned GAIL missed street expectations in the second quarter ending September 30, 2022 (Q2FY23). The company garnered a standalone net profit of ₹1,537.07 crore in Q2FY23 declining by 46.31% from ₹2,862.95 crore in the same quarter last year. Sequentially, Q2 PAT dipped by 47.27% from a profit of ₹2,915.19 crore recorded in Q1FY23.
However, the company's top-line front registered double-digit growth year-on-year. Revenue stood at ₹38,490.89 crore in Q2FY23 compared to a revenue of ₹21,515.30 crore in Q2FY22 --- registering a growth of 78.90%. Compared to the Q1FY23 quarter where revenue stood at ₹37,572.14 crore, GAIL has posted a growth of 2.45% in Q2FY23.
On segment-wise performance, in Q2FY23, GAIL's revenue from natural gas stood at ₹1,694.43 crore versus ₹1,646.23 crore in Q2FY22, while LPG revenue came in at ₹197.34 crore against ₹166.62 crore in Q2FY22.
Further, revenue from the natural gas marketing business stood at ₹35.465.35 crore --- higher than ₹17.876.53 crore in Q2FY22. While revenue in the petrochemicals business came in at ₹1,351.15 crore in Q2FY23 -- declining from ₹2,283.43 crore in Q2FY22. LPG And Liquid Hydrocarbons recorded a revenue of ₹1,393.86 crore in Q2FY23 versus ₹1.111.29 crore in Q2FY22.
In its audit report, GAIL pointed out that due to ongoing geopolitics, there has been a disruption in Liquified Natural Gas (LNG) cargo supplies by one of the Company's Long term LNG suppliers. It said that "the Company has taken various measures which include reduction of supplies to downstream customers and its internal consumption at Pata petrochemical plant by reducing petrochemical production to have sustainable operation."
EBITDA stood at ₹1,765 crore in Q2FY23 which fell by 59.4% compared to ₹4,348 crore witnessed in the same quarter a year ago.
Talking about Q2 performance, Avishek Datta – Research Analyst, Prabhudas Lilladher said, "GAIL reported lower than expected results with EBIDTA/PAT of Rs17.6 billion (-60%Q/Q; PLe Rs21.4bn) and Rs15.3 billion (-47%Q/Q; PLe Rs14.8bn)."
According to Datta, GAIL's Q2 earnings were hit by lower margins and volumes across businesses. Also, Q2 earnings were hit by a drop in gas trading EBIT to Rs3.6 billion from Q1 levels of Rs23.1 billion due to unfavourable economics. During the quarter, Q2 EBIT loss was at ₹3.4 billion versus gains of ₹351.6 million in Q1. Also, Gas transmission EBIT in Q2 was at Rs7.1 billion versus Rs8 billion iN Q1. Q2 LPG EBIT was at ₹5 billion versus ₹6.3 billion in Q1 due to a drop in realisation.
Meanwhile, the company's total expenses nearly doubled to ₹37,413.82 crore in the second quarter of FY23, compared to ₹18,606.99 crore in Q2 of FY22.
During Q2FY23, GAIL issued bonus shares in the ratio of one equity share for every two existing equity shares. The ratio comes at 1:2 at a face value of ₹10 each.
On Friday, GAIL shares closed at ₹88.90 apiece down by 1.82% on NSE.
On stock price, Datta added, "We await clarity in volumes. We continue to maintain BUY given inexpensive valuation of PER 7x FY24."