GAIL India - Transmission volumes continue to disappoint - Emkay

Reco: BUY
CMP: Rs364
Target Price: Rs406

- Results were significantly below street and our estimates, with EBIDTA at Rs.14.1bn and PAT at Rs.9.8bn. Subsidy payout for Q2FY13 grew by 38% YoY to Rs.7.8bn

- Revenue from natural gas transmission flat YoY at Rs.9.8bn, mainly on the back of decline in transmission volume by 10.6% YoY to 105.6mmscmd led by decline in KG D6 volume

- Trading business grew by 28% YoY to Rs.96.9bn, mainly on the back of better realization. However sequentially trading volume declined marginally by 1.5% to 81mmscmd

- At CMP stock trades at 11x FY14 EPS and 1.7x P/BV, maintain Buy with TP of Rs.406. However subsidy burden remains the key overhang on the stock

Source : Equity Bulls

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