GAIL India - March 2013 Results Preview - Motilal Oswal

- We expect GAIL to report adjusted PAT of INR8b (up 66%YoY, but down 38% QoQ). GAIL's PAT is down QoQ due to higher subsidy sharing at INR13b in 4QFY13 v/s INR6b in 3QFY13 (9MFY13 quarterly average of INR7b). Its subsidy sharing has averaged at INR7b for 9MFY13 till date. However, due to our full year FY13E upstream sharing assumption at 40%, we model higher share of upstream in 4QFY13E. If the sharing is maintained at INR7b for 4QFY13, our quarterly PAT will get upgraded by 79% to INR14b.

- Subsidy sharing assumption: For FY13E/FY14E/FY15E, we model upstream sharing at 40%, similar to FY11/FY12.

- We model gas transmission volumes at 104mmscmd v/s 116 in 4QFY12 and 105 in 3QFY13. Segmental EBIT (pre-subsidy) is expected to be up 3% QoQ, primarily due to higher profits from petrochemicals segment.

- Adjusted for investments, the stock trades at 6.9x FY15E EPS of INR32.7.

Source : Equity Bulls

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