Prabhudas Lilladher's research report on GAIL (India)
We maintain our earnings. GAIL reported lower than expected results with EBIDTA and PAT of Rs17.6bn (-59.6%QoQ; PLe Rs21.4bn) and Rs15.4bn (- 47.3%QoQ; PLe Rs14.8bn), due to weak segment businesses. Lower volumes and margins hit Q2 operational performance, however higher other income of Rs8bn supported PAT. Non receipt of Gazprom volumes (~18% of contracted volumes) remains a concern. Drop in US Henry Hub prices to $4.6/mmbtu vs Q2 levels of $8/mmbtu will help margins despite drop in spot LNG prices to $25/mmbtu vs $40/mmbtu in previous quarter.
Outlook
We believe commissioning of new pipelines over next one year will augment volumes and profits. Reiterate ‘BUY’ with a TP of Rs120 based on 7x EV/E FY24E.
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