Energy Sector PSU Stock Hits 4 Consecutive 52-Week High, Motilal Oswal Says Buy, TP Rs 145

Leading broking firm Motilal Oswal Financial Services has come up with a Buy on GAIL (India) Ltd. The brokerage has assigned a target price of Rs 145 per share on the stock, claiming a potential upside of up to 21% from its current level. The shares of Gail hit back-to-back 4 52-week-high since July 25. The stock is currently trading near its 52-week high.

GAIL is an Energy sector Maharatna Central Public Sector Enterprises (CPSE). GAIL is India's leading natural gas company with diversified interests across the natural gas value chain of trading, transmission, LPG production & transmission, LNG re-gasification, petrochemicals, city gas, E&P, etc. It is a large-cap PSU stock with a market cap of Rs 79,098.45 Crore.

Buy stock of GAIL For A Target Price of Rs 145/share

According to Motilal Oswal Financial Services, GAIL has guided for a capex of ~INR90-100b in FY24, with INR40b being spent on pipelines, INR32b for petrochem segment, INR7 for operations, INR2b for CGDs and the rest for equity investments and other. The remaining portion of the Jagdishpur-Haldia pipeline is expected to be completed by Jun'24.

The mechanical completion of the PP plant at PATA and the PDH-PP plant at Usar is expected by Jul'24 and Oct'25, respectively. Domestic allocation for internal consumption in the transmission segment has fallen from 1.55mmscmd to 0.4mmscmd currently. The management guides that it has represented for recovery of the one-off actual costs in transmission to the regulatory board.

"The stock trades at a ~9% discount to its one-year forward long-term P/E average. By valuing the core business at 10x FY25E adjusted EPS of INR10 and adding the value of listed and unlisted investments of INR26, we arrive at a TP of INR145/share. We maintain BUY on the stock," the brokerage has said.

Stock Outlook

On Tuesday, the shares of GAIL closed 1.09% higher at Rs 120.30 on BSE with intraday high and low of Rs 122.35 and Rs 117.25, respectively. On July 31, 2023, the stock hits 4th consecutive 52-week at Rs 122.85 per share, while it hits 52-week low at Rs 83 per share on Sept 26, 2022.

The stock surged 3.31% in the last 1 week, and 10.47% in the last 2 weeks, respectively. It gained 14.57% in 1 month, 12.17% in 3 months, and 25.25% in 6 months, respectively. It gained 22.48% in 1 year, 29.24% in 2 years, and 86.71% in 3 years, respectively. However, it declined 3.73% in 5 years.

Disclaimer - The stock has been picked from the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.