GAIL scales to new 52-week high even as CLSA downgrades stock to 'sell' after Q3 results

Shares of GAIL (India) climbed to a new 52-week high of Rs 177.10 after rallying over 3 per cent after the company’s Q3 numbers were released on January 29. The shares rallied even when global brokerage CLSA downgraded the stock to 'sell' from the previous ‘reduce’ rating.

Consolidated net profit at the natural gas transmission company for the period under review jumped multi-fold to Rs 3,193.34 crore on the back of a softening in the liquified natural gas (LNG) price. In Q3 FY23, the company’s net profit stood at Rs 397.59 crore. 

Sequentially, the company reported a 31 per cent increase in net profit, which was at Rs 2,442.18 crore in the quarter ending September 2023.

Revenue from operations at the company stood at Rs 34,767.84 crore in the quarter ending December, a marginal decline from Rs 35,939.96 crore logged in the year-ago period. In the September quarter, the company reported revenue of Rs 33,049.68 crore.

During the quarter, average natural gas transmission volume stood at 121.54 MMSCMD (million metric standard cubic metre per day) as against 120.31 MMSCMD in Q2 FY24, the company said in a press release.

Sandeep Kumar Gupta, Chairman & Managing Director, of GAIL (India) Limited, said that during the quarter, the physical performance has improved across all major business verticals, and the Petrochemical Segment has turned profitable owing to plant efficiency, better capacity utilisation, and other optimisation measures adopted.

He further stated that the company has incurred a capex of Rs 6,583 crore during the period from April 23 to December 23, mainly on pipelines, petrochemicals, equity to JVs, etc.

JP Morgan retained its neutral call on the counter with an increased target price of Rs 170. The brokerage stated that the company’s Q3 PAT of Rs 2,840 crore was 26%–25% higher than JPMe /consensus, with surprise largely driven by a swing back to profitability in its petrochemical & LPG segments. 

Further, it noted that GAIL’s gas trading business delivered EBITDA of Rs 2,070 crore for the quarter under review.

HSBC, on an optimistic note, retained its buy call on GAIL and increased the target to Rs 200 from Rs 150 earlier. The brokerage said better-than-expected results at GAIL during Q3 demonstrate demand momentum, increasing predictability, and business turnaround.

Lower gas prices, new gas marketing contracts, and the start of LNG volume are set to drive higher transmission utilisation, it added.

Maintaining a bullish view, foreign brokerage Citi also retained its buy call on GAIL with a raised target of Rs 195 as against Rs 185 earlier. The brokerage noted that the company’s petrochemical segment has returned to profitability. It also added that GAIL remains one of its preferred picks within the space.