550% Dividend, 2.3% Yield: Maharatna Stock GAIL Hits New High, Record Date Next Month; Motilal Sets Rs 200 TP

Maharatna status company, GAIL (India) hit new 52-week high on Tuesday after declaring its Q3 results, interim dividend and receiving long-term LNG contract. The leading natural gas producer backed by government is set to turn ex-dividend next week for up to 55% interim dividend payout. Also, GAIL's PAT jumped by double-digit 18% YoY, while revenue gained by 8% YoY. Addionally, GAIL also inked a long-term pact with ADNOC. Overall, Motilal Oswal is optimistic on GAIL and has set a target price of Rs 200, implying over 16% potential upside.

GAIL Share Price:

On BSE, GAIL share price ended at Rs 172.05 apiece, up by 0.20% with market cap of over Rs 1.13 lakh crore on Tuesday. During the day, the stock touched a new 52-week high of Rs 177.10 apiece.

From its 52-week low of Rs 91 apiece, the stock has zoomed by nearly 95% as of now.

GAIL Dividend:

The Maharatna company announced an interim dividend of 55% amounting to Rs 5.5 per share on the the paid-up equity share capital of the Company.

The company announced Tuesday, February 6, 2024, as the record date for identifying the eligible shareholders of the payout. February 6 is also the ex-dividend date.

Currently, it has a dividend yield of 2.32%. In the last 12 months, the company paid up to Rs 4 dividends per share. As per Trendlyne data, GAIL has paid up to 47 dividends since September 2001.

GAIL Q3 Results:

The Consolidated Revenue from Operations on quarterly basis up by 5% to Rs 34,768 crore in Q3 FY24 as against Rs 33,050 crore in Q2 FY24, PBT registered a growth of30% to Rs 4,075 crores in Q3 FY24 as against Rs 3,138 crores in the previous quarter. PAT (excluding Non-controlling interest) increased by 31 % to Rs 3,195 crore in Q3 FY24 as against Rs 2,444 crore in the previous quarter.

Also, on Consolidated basis, Revenue from Operations stood at Rs 1,00,666 crore for up to Q3 FY24 as against Rs 1,12,611 crore in the corresponding period of the previous year. PBT for up to Q3 FY24.up by 45% to Rs 9,496 crore as against Rs 6,567 crore for up to Q3 FY23. PAT (excluding Non-controlling interest) up by 49% to Rs 7,431 crore for up to Q3 FY24 as against Rs 4,982 crore for up to Q3 FY23.

During the quarter, Average Natural Gas Transmission volume stood at 121.54 MMSCMD as against 120.31 MMSCMD in Q2 FY24. Gas marketing volume stood at 98.14 MMSCMD as against 96.96 MMSCMD in the previous quarter. LHC sales stood at 249 TMT as against 242 TMT & Polymer sales jumped up by 28% to 215 TMT as against 168 TMT in comparison to the previous quarter.

GAIL Long-Term Contract:

The largest natural gas company of India also announced that it has successfully concluded a long-term LNG purchase agreement for purchase of around 0.5 MMTP A LNG from ADNOC Gas. This significant development between GAIL and ADNOC will reinforce the robust cultural and economic bonds between India and the United Arab Emirates (UAE).

Under this agreement, the deliveries will commence from 2026 onwards for a duration of 10 years, across India. This arrangement is believed to further aid in India's rising energy security requirements and, simultaneously, also fuel GAIL's strategic growth objectives to cater to its downstream customers in the rapidly evolving Natural Gas landscape of the country.

GAIL Share Price Outlook:

In its research note, Motilal Oswal said, We reiterate our BUY rating on GAIL and raise our TP to INR200. During FY23- 26E, we are modeling the EBITDA to report a 33% CAGR driven by:

- Rising natural gas transmission volumes to 141mmscmd in FY26 from 107mmscmd in FY23;

- Substantial improvement in petchem segment's profitability over 2HFY25- FY26, as the new petchem capacity will be operational and low inventories globally will drive re-stocking demand; and

- Commencement of operations of 3,892km of gas transmission pipelines and 560ktpa of petchem capacity.

"We expect GAIL's RoE to improve to ~15% in FY26 from 9.5% in FY23 with a healthy FCF generation of INR49.4b in FY26 (vs. -INR45.3b in FY23). This, we believe, can drive a re-rating for the stock," Motilal's note said.

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.