Higher opex and one-offs weighed on Q4 performance…
GAIL (India) Limited is an integrated energy company in the hydrocarbon sector with presence across gas transmission, processing, distribution and marketing in India with a pipeline network of over 11,000 Kms.
Valuations & View
We expect revenue/PAT to grow at a CAGR of ~11%/18% over FY17-19E driven by higher utilisation levels in Petrochemicals segment coupled with strong transmission volumes. Further, concerns over the expensive long-term US LNG contracts is expected to ease with growth in domestic LNG demand especially from the fertiliser sector coupled with company’s focus to sell more US LNG volumes to European and other consumers on long term basis and swap deals. The management expects a potential demand for ~3mmtpa from the commissioning of five fertiliser plants by end of CY20. Hence, we recommend a ‘BUY’ rating on the stock with a TP of Rs447 based on SOTP valuation methodology.
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