Brokers’ Call: Citi remains neutral on GAIL

Citi has reiterated its ‘Neutral’ rating on GAIL with a target price of Rs 361. “After sustained underperformance (by ~15%) over the past year, the risk-reward in GAIL is now more favourable. However, while negatives such as potential gas price hikes are largely priced in, near-term earnings growth remains muted and upside from current levels seems limited. We estimate our fair value could decline to ~Rs 340 and our FY14-15E earnings could decline by a further ~6-8% if gas prices are hiked to ~$8 and there is no offset available through lower subsidies,” Citi said in a report.