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3QFY2011 Result Reviews
GAIL
GAIL’s 3QFY2011 reported numbers were marginally above our expectation. The company’s
top line grew by robust 34.7% yoy to `8,365cr (`6,212cr) during the quarter, against our
expectation of `8,276cr, primarily on the back of good yoy performance in the natural gas
transmission, natural gas trading and LPG transmission segments. The natural gas
transmission segment registered top-line growth of 17.4%; operating profit of the segment
grew by 14.2% yoy. Gas transmission volumes grew by 10.3% yoy to 120mmscmd
(109mmscmd) during the quarter on the back of higher spot volumes transmitted, despite
lower KG D6 gas production. Similarly, the NG Trading segment also reported robust topline
growth of 49.6% yoy and operating profit growth of 75.4% yoy due to marketing margin
on APM gas. Subsidy burden during the quarter stood at `418cr, in line with our estimates.
However, the disappointment in performance came from lower-than-expected LPG and
liquid hydrocarbon volumes and petrochemical volumes. This coupled with higher other
operating expenses and cost of purchase of finished goods resulted in GAIL’s operating
profit growing by mere 3.5% yoy to `1,314cr (`1,270cr), below our expectation of `1,606cr.
PAT during the quarter stood at `968cr (`860cr), registering growth of 12.5% yoy, which was
4% higher than our expectation of `930cr due to higher other income and lower effective tax
rate. We have valued GAIL on an SOTP basis. We maintain our Accumulate rating on the
stock with a Target Price of `530/share.
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