Analyst Research Report Snapshot

Title:

Gas Authority of India (GAIL) - Qtr. Update - Dtd. - October 29, 2012

Price:

$46.00

Provider:

Axis Capital Limited

Date:

30 Oct 2012

Pages:

5

Type:

AcrobatPDF

Companies referenced:

GAIL.NS

Available for Immediate Download
Summary:

GAIL’s adjusted Q2 PAT at Rs 10.6 bn was higher than our expectation of Rs 8.8 bn due to higher petchem, LPG EBIT. Reported PAT was lower at Rs 9.8 bn due to one-time adjustment of Rs 1.2 bn (due to retrospective reduction in LPG pipeline tariffs). Key takeaways from analyst call:  GAIL lowered its guidance of FY13 exit gas transmission volume to 115 mmscmd (121-125 mmscmd earlier, 106 mmscmd in Q1) due to muted KG-D6 volume and delayed commissioning of Dabhol, Kochi LNG terminals. Gas volume to remain flat at 115 mmscmd in FY14E.  Dabhol LNG terminal would be commissioned by December 2012, with likely regasification charge of Rs 40/mmbtu. Annual gas volume till FY15 is likely to exceed 2.2 mnte.  Commissioning of Dabhol-Bangalore pipelines (phase-I) has been delayed to Dec ’12 (Aug ’12 earlier). The pipeline would be capitalized in FY14.  A-1 gas field in Myanmar (GAIL’s stake 8.5%) would commence commercial production by May ’13, with plateau production of 16 mmscmd. No near term triggers, Maintain HOLD: GAIL’s EPS would remain flat over FY12-14E due to muted gas volumes and capitalization of new pipelines. In the long-run, IRRs of north-Indian pipelines are at risk due to competition from GSPL. Maintain HOLD with target price of Rs 370, which implies 3% upside. At CMP of Rs 361, the stock trades at 12x FY13E EPS of Rs 31 and 11x FY14E EPS of Rs 33. Regards, Amit Mishra, CFA (Sr VP – Energy) Institutional Equity Research Axis Capital Ltd Tel: +91 22 4325 1142 Prashant Tarwadi (AVP – Energy) Institutional Equity Research Axis Capital Ltd Tel: +91 22 4325 1113

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