1:2 Bonus Issue: BUY Maharatna PSU Oil & Gas Stock GAIL For Target Price Of Rs 250, Signals Over 9% Rise Ahead

Maharatna PSU natural gas producer, GAIL (India) is among the top picks of Religare Broking. The brokerage has added this CPSE giant stock to its tech stars list with a target price of Rs 250 for the short-term timeframe. There is a potential upside of over 9% seen in GAIL ahead of stock exchanges. GAIL stock will be in focus ahead of the Budget where announcements related to bringing natural gas commodities under the GST regime are expected.

Also, GAIL stock will be in focus due to the Q1 earnings season.

On BSE, GAIL's share price is at Rs 228.95 apiece, with a market cap of Rs 1,50,536.91 crore. On July 9th, the stock touched a new 52-week high of Rs 234.15 apiece before correcting. The stock is currently more than double from its 52-week low of Rs 107.55 apiece.

YTD, GAIL stock is up by nearly 38%. In a year, the stock rallied by over 110%, becoming a multi-bagger.

Religare guides investors to BUY GAIL share price during the price range of Rs 226-231. The target price is set at Rs 250 with a stop loss of Rs 218.

In its note, Religare said, "GAIL has been in a steady uptrend for over 7 months with a gradual rise in volumes. It has been forming base on base pattern holding above its short-term moving average, which suggests inherent strength in price and momentum."

The brokerage further added, "The stock has recorded a fresh breakout from the elevated basing pattern with decent volumes highlighting a bullish tone to continue. Traders can consider fresh longs in the mentioned range."

GAIL is a pioneer in city gas distribution (CGD) business in India. It has a presence in 67 Geographical Areas across India. GAIL has 8 JVs and three subsidiaries in India for its CGD business. Further, GAIL has an overseas presence in the USA, Singapore, Myanmar, China, and Egypt.

FY24 Revenue from Operations stood at Rs 1,33,500 crore in FY24 as against Rs 1,45,875 crore during FY23. PBT in FY24 stood at Rs 12,595 crore (up by 74%) as against Rs 7,256 crore in FY23. PAT (excluding Non-controlling interest) was Rs 9,899 crore in FY24 (up by 76%) as against Rs 5,616 crore in FY23.

Among its corporate actions, this natural gas producer is among the leading PSU stocks that pay hefty dividends. As per Trendlyne data, GAIL has paid up to 47 dividends since September 2001.

Additionally, GAIL also holds a long track record of rewarding bonus shares. The first time, GAIL turned ex-bonus was on October 6, 2008, for its bonus issue in the ratio of 1:2. After nearly a decade, GAIL rewarded two back-to-back bonus shares of 1:3 each in March 2017 and March 2018. Later on, the company also paid bonus shares in the ratio of 1:1 in July 2019. The latest bonus issue is of 1:2 which was in September 2022.

If natural gas is brought under the GST regime, GAIL is expected to be among the biggest beneficiaries. Earlier, Jefferies report said, that inclusion could lower LNG cost by US$ 0.8-0.9/mmbtu, aiding faster adoption and helping GAIL's TX and trading vol in the medium term.

Jefferies highlighted that the improved competitiveness of NG should drive faster adoption and aid transmission and trading volume growth over the medium term for GAIL. Also, the company expects the LPG and transmission businesses to benefit, but it is likely to pass on some of the benefits to its consumers.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.