Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
GAIL (India) Ltd.
Beneficiary of higher gas usage in India
[EXTRACT]
„ Positive on business outlook: lower domestic gas = lower competition
GAIL is India’s largest gas carrier. It also provides exposure to CGD through its JV
stakes and has support from its other businesses such as petrochemicals. While there is
increasing competition in the gas infrastructure business, we believe GAIL’s
understanding of the business, its customer relationships, and most importantly, its
existing infrastructure pipeline gives it strong advantages as domestic gas supply falls.
„ We lower our estimates moderately due to lower supply and rising costs
We lower our FY12/13/14 EPS estimates by 4.7%/4.2%/3.7% and our price target to
Rs550.00 as we factor in lower gas supply and higher input cost inflation. We assume
gas volumes of 124/134 mmscmd for FY12/13. We expect increases mainly due to
higher LNG imports and greater domestic supply from ONGC’s fields. GAIL’s gas
volume forecast exceeds ours mainly because we have factored in lower LNG imports
due to our concern over high prices of imported gas.
„ Upside from faster execution at Dabhol and petrochemical business
We expect the Dabhol LNG terminal’s capacity to double to 17mmscmd once the
breakwater facility is in place by FY13. The project has not started and could take up to
two years to complete. An earlier-than-expected completion could provide upside to
our volume forecasts. GAIL’s gas-based petrochemical business is also benefitting
from high oil prices.
„ Valuation: maintain Buy rating; lower price target to Rs550 from Rs580
The share price has fallen 18% from its peak six months ago. At 11.9x FY13E PE and a
dividend yield of 4.1%, we think GAIL is attractive. We forecast gas volume will grow
9% per annum over the next five years. We value the company’s pipeline operations on
a DCF basis. We assume a WACC of 9%
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
GAIL (India) Ltd.
Beneficiary of higher gas usage in India
[EXTRACT]
„ Positive on business outlook: lower domestic gas = lower competition
GAIL is India’s largest gas carrier. It also provides exposure to CGD through its JV
stakes and has support from its other businesses such as petrochemicals. While there is
increasing competition in the gas infrastructure business, we believe GAIL’s
understanding of the business, its customer relationships, and most importantly, its
existing infrastructure pipeline gives it strong advantages as domestic gas supply falls.
„ We lower our estimates moderately due to lower supply and rising costs
We lower our FY12/13/14 EPS estimates by 4.7%/4.2%/3.7% and our price target to
Rs550.00 as we factor in lower gas supply and higher input cost inflation. We assume
gas volumes of 124/134 mmscmd for FY12/13. We expect increases mainly due to
higher LNG imports and greater domestic supply from ONGC’s fields. GAIL’s gas
volume forecast exceeds ours mainly because we have factored in lower LNG imports
due to our concern over high prices of imported gas.
„ Upside from faster execution at Dabhol and petrochemical business
We expect the Dabhol LNG terminal’s capacity to double to 17mmscmd once the
breakwater facility is in place by FY13. The project has not started and could take up to
two years to complete. An earlier-than-expected completion could provide upside to
our volume forecasts. GAIL’s gas-based petrochemical business is also benefitting
from high oil prices.
„ Valuation: maintain Buy rating; lower price target to Rs550 from Rs580
The share price has fallen 18% from its peak six months ago. At 11.9x FY13E PE and a
dividend yield of 4.1%, we think GAIL is attractive. We forecast gas volume will grow
9% per annum over the next five years. We value the company’s pipeline operations on
a DCF basis. We assume a WACC of 9%
No comments:
Post a Comment