Analysts bullish on GAIL India after robust Q4FY24 performance

Analysts have turned bullish on GAIL India stock, which posted strong financial performance for Q4 of FY24. State-run GAIL on Thursday reported a multi-fold jump y-o-y in its consolidated net profit at ₹2,474 crore during Q4 FY24, aided by higher numbers from transmission services, liquid hydrocarbons and petrochemicals. It had posted a PAT of ₹643 crore in the same year-ago quarter.

Analysts have turned bullish on GAIL India stock, which posted strong financial performance for Q4 of FY24. State-run GAIL on Thursday reported a multi-fold jump y-o-y in its consolidated net profit at ₹2,474 crore during Q4 FY24, aided by higher numbers from transmission services, liquid hydrocarbons and petrochemicals. It had posted a PAT of ₹643 crore in the same year-ago quarter.

However, the country’s largest gas utility’s net profit fell 23 per cent sequentially . GAIL’s consolidated total income stood at ₹33,070 crore (₹33,811 crore). For FY24, GAIL’s consolidated net profit rose 77 per cent y-o-y to ₹9,903 crore. Consolidated total income, however, fell to ₹1.35-lakh crore in FY24 from ₹1.47-lakh crore in FY23.

Shares of the Maharatna natural gas major on the BSE closed today at ₹204.80 — down 2.18 per cent.

“GAIL India’s EBITDA/PAT was a miss to our estimates largely led by lower than expected profit from gas marketing business while petrochemicals surprised positively,” said Systematix Research.

Emkay Global upgraded GAIL to Add from Reduce, with a >50 per cent revision in TP to ₹220, “as the company seems to be in a sweet spot.” Despite its strong run-up, the stock has further positive triggers, it said. In transmission, the management slightly upped its volume guidance and expects more tariff hikes once the PNGRB takes up gas pricing (about 12 per cent) and capacity for consideration. In marketing, EBITDA would be at least ₹4,000-4,500 crore in FY25, and, given FY24 numbers (₹6,800 crore actual vs ₹3,500 crore initially guided), EBITDA could log much higher.

Motilal Oswal, which reiterated its buy rating with a target price of ₹235, said the key takeaways from the analyst meeting with the management: the quality of guidance has significantly improved, and GAIL remains on track to achieve the guided volumes and profitability in transmission and trading; the strength of improvement in petchem profitability has surprised us/street; and key projects such as PDH-PP remain on track for completion as per timelines.”

GAIL CMD Sandeep Kumar Gupta said the robust performance during FY24 is primarily driven by better physical performance across all major segments despite lower petrochemicals and liquid hydrocarbons prices.

“We reiterate Accumulate as GAIL has run-up 62 per cent in the past three months, partly factoring in strong gas volume growth outlook, led by accelerating CGD demand and +150mn tonnes LNG export capacity addition globally in CY24-28,” said Elara Securities in a note. It hiked the target price to ₹227 from ₹191.

“We are raising our EBITDA estimates marginally by 2.9/3.7 per cent for FY25E/FY26 and raising TP to ₹202 from earlier ₹182, said Systematix while retaining its Hold rating.

GAIL has signed a long-term contract with Vitol Asia and ADNOC LNG for ~1.5mmtpa LNG volumes starting 2026, an offtake of 4.5mmtpa from Petronet from 2028, and an agreement with BPCL for a 15-year supply of Propane for its upcoming petchem plant. Thus, management remained confident of future growth in transmission and marketing volumes backed by firm long-term contracts, said Centrum Broking.

The domestic brokerage retained its Sell rating on GAIL wlth a revised target price of ₹148 (140), as the stock is trading at “high valuations”.

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