GAIL Share Price: Brokerage GAIL (India) is recommended to BUY after its Q2 results for FY25, came in line with its estimates. The company witnessed stable transmission EBITDA, while its petchem business turned profitable again in the second quarter. Motilal believes there is potential for a 10% tariff hike by GAIL, and expects its transmission volumes to drive growth in the next fiscal.
GAIL Share Price:
On November 8, GAIL share price ended at Rs 204.15 apiece, down by 3% on BSE with market cap of Rs 1,34,230.66 crore. The stock's 52-week high and low is at Rs 246.35 apiece and Rs 122.90 apiece.
Despite Friday's fall, GAIL share price ended last week's trading session with gains of nearly 3.5%. YTD, the stock is up by nearly 23% on BSE.
Motilal Oswal On GAIL:
For GAIL, Brokerage Motilal sees three catalysts ahead for FY26-27: 1) a potential 10% tariff hike for the transmission business in 4QFY25; 2) moderate but sustained growth in transmission/marketing volumes in FY26-27 (with potential for upside if spot prices correct meaningfully); and 3) petchem capacity more than doubling by the end of FY27 from the current 810 KTA.
Reiterating BUY on GAIL, Motilal estimates a 14% CAGR in PAT during FY24-27 driven by:
- an increase in natural gas transmission volumes to 149mmscmd in FY27 from 120mmscmd in FY24;
- substantial improvement in petchem segment's profitability over 2HFY25- FY27 as the new petchem capacity will be operational and spreads are bottoming out;
- healthy trading segment's profitability with guided EBIT of at least INR45b.
Motilal is expecting GAIL's RoE to improve to ~16% in FY26 from 9.5% in FY23, with a healthy FCF generation of INR73b in FY26 (vs. -INR45.3b in FY23), which it expects to support GAIL's valuation. That being said, Motilal has set new target price of Rs 265 on GAIL, which if achieved, could be its new record high.
In Q2FY25, the company reported revenue from operations of Rs 32,931 crore, as against Rs 33,692 crore in Q1 FY-25. PAT stood at Rs 2,672 crore in Q2 FY-25 as against Rs 2,724 crore in Q1 FY-25.
Also, in the quarter, the company stated its Natural Gas transmission volume stood at 130.63 MMSCMD in Q2 FY-25 & Gas marketing volume was 96.60 MMSCMD in Q2 FY'25. The LHC & Polymer sales stood at 253 TMT & 226 TMT respectively in Q2 FY-25 as compared to 218 TMT & 169 TMT respectively in Q1 FY-25.
GAIL Corporate Actions:
GAIL is among the leading PSU stocks that pay hefty dividends. As per Trendlyne data, GAIL has paid up to 47 dividends since September 2001. GAIL is also among the highest bonus issue distributors to its investors.
Noteworthily, the natural gas producer has 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.
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