Mahratna PSU giant, GAIL (India), a leading oil and gas company, has trended bullish in the past 1 month, giving nearly 20% returns. GAIL is currently traded around Rs 185 apiece level, and its weekly performance is up by 4% on BSE. Brokerage ICICI Securities believes GAIL's earnings are poised to improve in the next 12 months, and its valuations remain attractive. Hence, the brokerage recommended BUY.
GAIL Share Price:
After market hours of April 3rd, GAIL stock ended at Rs 183.70 apiece, marginally up on BSE, with a market cap of Rs 1,20,784.58 crore. The stock zoomed by 4.05% in the past five trading sessions, while in a month, GAIL has advanced by a whopping 19.9%.
On April 3rd, GAIL clarified that it has not made any Encumbrance on equity shares of companies like Petronet LNG, Indraprastha Gas, and Mahanagar Gas. These are all leading CNG and PNG suppliers in India.
Also, earlier this week, GAIL launched the 10th round of its initiative 'GAIL Pankh' through which interested Start-Ups can apply for equity investment from the Maharatna PSU. GAIL has a corpus of Rs 500 crore for its Start-Up initiative, as per the filing.
GAIL's 52-week high and low is at Rs 246.35 apiece and Rs 150.60 apiece respectively. On BSE, as of April 3rd, GAIL's price-to-equity share is at 15.86x, while return on equity is at 10.80%.
GAIL Corporate Actions:
GAIL is among top dividend paying and bonus issuing stocks in the PSU ambit.
Dividends: Since January 2003, the company delivered about 45 dividends to its shareholders. In the last 12 months, the dividend payout was of Rs 6.50 per share. Currently, it has one of the highest dividend yield of 3.5% in the PSU basket.
Bonus Issue: In total, GAIL has issued five bonuses. The latest bonus issue was 1:2 in September 2022, while earlier, it rewarded bonus shares of 1:1 in July 2019. Before this, GAIL delivered 1:3 bonus issues each in March 2018 and March 2017. Its first bonus issue was of 1:2 ratio in October 2008.
GAIL Share Recommendation:
Brokerage ICICI Securities in its note pointed out that GAIL's Q3 results were below the street's estimates, with multiple one-offs dragging trading segment earnings and reigniting the long-held apprehension on the unpredictability of the trading segment. Hence, its stock has reacted negatively, with ~23% decline over the last 6 months.
However, the brokerage expects the tide in GAIL to shift for all the positive reasons.
ICICI Securities highlighted that Indian gas demand is set to grow steadily over the next couple of years, with overall demand growing via fertiliser and CGD (city gas distribution) segments and from industrial sector. Overall gas demand has grown by ~40mmscmd (~25% vs FY23 levels) for 10MFY25, with further growth ahead, led by i) rising CGD, ii) additional fertiliser plant commissioning/demand along the Eastern gas grid, iii) growth in industrial demand and iv) forecasts implying strong growth in power demand in the country, which may drive better utilisation of gas-fired power plants.
Thus, driven by this and the completion of multiple expansion plans by GAIL, ICICI Securites expects steady 9-10mmscmd growth in transmission/trading volumes for GAIL over the next 3-5 years.
On the valuation, ICICI Securities note said, "We believe earnings may improve steadily over the next 12 months, driven by: i) One-offs impacting trading have resolved somewhat in Q4-TD and should have limited impact over FY26 led by: ii) Sustained volume growth for transmission/trading as gas demand grows over FY26-27E, iii) gas costs for patches may remain flat and realisation should somewhat improve, iv) tariff order gets closer, with the release of PCD on tariff norms (see here ) and v) valuation remains attractive. Reiterate BUY, with TP of INR 245."
About GAIL:
GAIL was incorporated in August, 1984 as a Central Public Sector Undertaking (PSU) under the Ministry of Petroleum & Natural Gas (MoP&NG), with the mission of "accelerating and optimizing the effective and economic use of Natural Gas and its fractions for the benefit of the national economy".
Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.
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