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Steady performer…
�� Strong expansion plans
• GAIL (India) Limited is India's flagship natural gas company,
integrating all aspects of the natural gas value chain. This includes
business segments like exploration & production, LPG production,
petrochemicals, transmission, distribution and marketing of
natural gas
• GAIL owns ~8,000 km of natural gas pipelines with a capacity to
carry 170 mmscmd across the country
• The company had petrochemicals capacity of 4,50,000 TPA at the
end of FY11 and has retail gas presence across 15 cities in India
�� Going ahead
• GAIL plans to add 6,000 km of pipelines and increase its gas
transmission capacity to 300 mmscmd in the next three years.
The company also plans to double its petrochemicals capacity to
9,00,000 TPA in the next few years. Going forward, the gas
business will contribute towards major part of company’s
profitability. The petrochemical segment would follow in terms of
profitability.
• GAIL has formed a wholly subsidiary, GAIL Gas Ltd, to
aggressively expand its operations in City Gas Distribution
projects. It plans to cover ~ 50 cities by FY14.
• GAIL also plans to diversify its revenue stream by adding ~550
MW of power plants by the end of FY14.
Valuation
Strong financials, a dominant position in transmission and relatively
newer asset base provides good growth prospects for the company. GAIL
is also expected to be the key beneficiary of the increase in demand for
natural gas in India. With the current capital expenditure plans in place,
GAIL offers a lot of safety and visibility of earnings growth to investors
over the next few years.
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