GAIL (India) Ltd. - LPG segment disappoints - Emkay

Reco: ACCUMULATE
CMP: Rs 329
Target Price: Rs 355

- Results were below street and our estimate at PAT level, with EBIDTA at Rs.15bn and PAT at Rs.8bn. Subsidy payout for Q1FY14 increase by 21% sequentially to Rs.7bn

- Natural gas transmission revenue back on track post write-off in last quarter to Rs.9.2bn with flat volume at 99.5mmscmd. While tariff stood at Rs.1/scm, 19.5% YoY

- LPG EBIT in loss at Rs.-0.11bn vs. Rs.4.9bn QoQ due to A) lower net realisation b) stoppage of KG D6 gas to LPG plant from May and 3) higher subsidy burden

- Maintain our accumulate rating due to lack of near term trigger with a TP of Rs.355. Currently, the stock trades at 10x FY15EPS and 1.4x P/Bv

Source : Equity Bulls

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