Buy GAIL (India), target price Rs 127: ICICI Securities

ICICI Securities has buy call on GAIL (India) Ltd. with a target price of Rs 127.The current market price of GAIL (India) is Rs 97.45.

GAIL (India), incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 63942.84 Crore) operating in Gas & Petroleum sector.

GAIL (India) key Products/Revenue Segments include Gas Natural, Polymers, Sale of services, Propane, Other Operating Revenue, Compressed Natural Gas (CNG), Power, Oil Crude for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 38921.38 Crore, up 2.46 % from last quarter Total Income of Rs 37987.96 Crore and up 76.46 % from last year same quarter Total Income of Rs 22056.21 Crore. Company has reported net profit after tax of Rs 997.55 Crore in latest quarter.

The company’s top management includes Mr.Manoj Jain, Mrs.Kangabam Inaocha Devi, Mr.Nandhagopal Narayanasamy, Mr.Sanjay Kashyap, Mr.Sher Singh, Mr.Akhilesh Jain, Mr.Navneet Mohan Kothari, Mr.Deepak Gupta, Mr.R K Jain, Mr.M V Iye, Mr.Ravikant Kolhe. Company has A R & Co. as its auditors. As on 30-06-2022, the company has a total of 658 Crore shares outstanding.

Investment Rationale
The brokerage revises FY23/24E EPS down by 10/9% respectively, to factor i) lower trading margins, ii) lower petrochemical volumes and iii) lower transmission volumes. This is offset partially by 5% higher transmission tariffs assumed for FY24e onwards, albeit there is an upside risk to this estimate. Valuations of <7x FY24E EPS and just 5.3x EV/EBITDA remain overly pessimistic and ignore the solid business model and strong long-term prospects.

Promoter/FII Holdings
Promoters held 51.89 per cent stake in the company as of 30-Jun-2022, while FIIs owned 19.92 per cent, DIIs 15.29 per cent.