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Target: ₹125
CMP: ₹105.05
We attended GAIL’s analyst meet today. During the interaction, the management highlighted that the revised integrated tariff of INR 58.61/mmbtu is a positive for the company and is likely to result in its gas transmission segment annual revenue increasing by ₹2,000 crore to around ₹8,000 crore at Q3-FY23 volume of 104mmcmd, and rising further to over ₹9,000 crore in FY24 assuming gas transmission volume jumps to 120mmcmd.
The management expects the government to accept the Kirit Parikh (KP) committee recommendations before March.
It confirmed that gas supply from Gazprom was being restored gradually and guided for transmission volume of 120mmcmd in FY24 and growth of 5 per cent CAGR thereafter. It also guided for gas trading EBITDA of ₹3,500 crore in FY24 and said over 50 per cent of US LNG volume had been sold in India back-to-back on US HH (Henry Hub) benchmark.
On the petchem front, the management disclosed that the Pata petchem plant was operating at 100 per cent utilisation and reiterated its aggressive capex plans on the petchem business.
We have raised our FY24-25 EBITDA by about 4 per cent to account for the revised gas pipeline tariff and higher petchem utilisation; our TP has been revised to ₹125 (from ₹120).
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