Gail (India) - Q4FY20 Result Update - ICICI Securities

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. Revenues for the quarter fell 5.4% YoY to Rs. 17753.1 crore. EBITDA came in at Rs. 2475.4 crore (up 47% YoY), above our estimate of Rs. 2008.4 crore. Reported PAT at Rs. 3018.2 crore (up 168.9% YoY) was above our estimate of Rs. 1341.7 crore mainly due to tax reversal as the company shifted to lower tax rate.

Valuation & Outlook

In Q1FY21E, Gail's gas sales were down up to 30% in April but recovered later and is currently at 90%. The profitability of gas trading, petchem & LPG segment, which is dependent on crude oil prices will be important for overall operational performance. The timeline of bifurcation into transmission and marketing business will be important to watch in the medium term. We value Gail using the SOTP methodology, valuing the core business using DCF and EV/EBITDA multiple for other business segments with a HOLD recommendation and a target price of Rs. 100.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GAIL_Q4FY20.pdf

Shares of GAIL (INDIA) LTD. was last trading in BSE at Rs.103.15 as compared to the previous close of Rs. 101.35. The total number of shares traded during the day was 2296786 in over 10940 trades.

The stock hit an intraday high of Rs. 106.9 and intraday low of 102.45. The net turnover during the day was Rs. 240639334.

Source : Equity Bulls

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