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GAIL (India)
F2Q11: Broadly In Line
Quick Comment: GAIL reported F1Q11 results,
registering EBITDA of Rs14.6 bn – 4% below our
expectation, flat sequentially, and up 40% YoY.
However, PAT of Rs9.2bn, up ~ 30% YoY and 4% QoQ,
was in line with expectation thanks to higher than
expected non-operating income, up ~214% QoQ and
2% YoY. We expect GAIL to continue to report robust
numbers, reflecting strong gas transmission volumes
and lower subsidy burden during the second half of the
year.
transmission volumes for the quarter were at
~115mmscmd, up 8% YoY, but down marginally QoQ,
-1%. The sequential decline was mainly because of
shutdown at PMT fields, which affected transmission
volumes. The division reported EBITDA of Rs6.6bn, up
23% YoY but down 2.8% QoQ.
LPG Division: lower than expected despite lower
subsidy burden: GAIL reported EBITDA of ~Rs2 bn for
this division, up from an EBITDA loss of Rs500mn in
F2Q10, as its subsidy burden declined 25% YoY and
22% QoQ. However, despite a sequentially lower
subsidy burden, EBITDA declined 23% QoQ as volumes
were down 4% and LPG/Liquid Hydrocarbon realisation
was down 10% QoQ. GAIL expects LPG volumes to
recover in coming quarters.
Petrochemical division remained flat despite
shutdown: Petrochemical EBITDA was Rs3.1bn,
largely flat on a YoY basis but down 4% QoQ.
Production volumes were down 6% as fire shut down
one of the units. Sales volumes, however, were up 22%
as the inventory buildup during F1Q11 was reversed
during the reporting quarter. Also, prices for
HDPE/LDPE declined by ~8% during the quarter, which
contributed to the decline in EBITDA.
We currently maintain our estimates and our
Overweight rating on the stock.
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