Gail India - Q4FY20 First Cut - ICICI Securities

(CMP - Rs. 101, MCap - Rs. 45710 crore)

Gail India reported Q4FY20 results which were better than our estimates. The profitability of gas transmission and natural gas trading was above our estimates on an operational basis while Petchem and LPG/LLH results were below estimates. Subsequently EBITDA at Rs. 2475.4 crore (up 47% YoY), came above our estimates of Rs. 2008.4 crore. The reported PAT at Rs. 3018.2 crore (up 168.9% YoY) came above our estimates of Rs. 1341.7 crore mainly due to tax reversal as the company shifted to lower tax rate.

Q4FY20 Earnings Summary

- The natural gas transmission volumes were flattish YoY and stood at 109 mmscmd (our estimate: 104 mmscmd). Also, marginally higher than expected transmission tariffs led to gas transmission EBIT at Rs. 892 crore, above our estimates of Rs. 695 crore

- On the gas trading front, the volumes stood at 97.8 mmscmd, down 0.7% YoY and came above our estimate of 93 mmscmd due to lower than expected impact of lockdown. Gas trading profitability came above our estimates at Rs. 602.6 crore (our estimates: Rs. 352 crore) as the company would have sold US cargoes at higher price earlier during the quarter

- Petrochemical EBIT at Rs. 72.4 crore came below our estimates of Rs. 91.4 crore due to lower than estimated volume and realisation. The LPG/LLH segment results witnessed lower than estimated profitability at Rs. 528.1 crore

- Summing up, EBITDA at Rs. 2475.4 crore (up 47% YoY), came above our estimates of Rs. 2008.4 crore on account of better than expected profitability in gas trading and transmission segments

- Subsequently, the reported PAT at Rs. 3018.2 crore (up 168.9% YoY) was above estimates of Rs. 1341.7 crore due to tax reversal as the company shifted to lower tax rate

Gail's gas offtake towards the end of the quarter was impacted due to closure of industries. Decline in oil prices, leading to lower product prices also impacted the performance. Pick up in demand, performance in the gas trading segment as well as product price improvement will be important in the near term.

We will be coming out with the detailed report soon.

Shares of GAIL (INDIA) LTD. was last trading in BSE at Rs.101.35 as compared to the previous close of Rs. 99.25. The total number of shares traded during the day was 2588716 in over 14377 trades.

The stock hit an intraday high of Rs. 104.25 and intraday low of 98.55. The net turnover during the day was Rs. 262097393.

Source : Equity Bulls

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