Stock recommendations: Buy GAIL (India), target price Rs 245: ICICI Securities

ICICI Securities has buy call on GAIL (India) with a target price of Rs 245. The current market price of GAIL (India) Ltd. is Rs 160.6. Time period given by analyst is one year when GAIL (India) Ltd. price can reach defined target.

GAIL (India) Ltd., incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 71334.79 Crore) operating in Gas & Petroleum sector.

GAIL (India) Ltd. key Products/Revenue Segments include Gas Natural, Polymers, Sale of services, Propane, Other Operating Revenue, Compressed Natural Gas (CNG), Power, Oil Crude, Income From Telecom for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 26566.52 Crore, up 20.45 % from last quarter Total Income of Rs 22056.21 Crore and up 67.27 % from last year same quarter Total Income of Rs 15882.82 Crore. Company reported net profit after tax of Rs 3374.35 Crore in latest quarter.

Investment Rationale
While GAIL’s stock price has remained relatively steady over the last three months, the brokerage believes material upside is in store, given: 1) the 9% CAGR in EPS over FY22E-FY24E, 2) valuations of just 5.6x FY24E P/E and 4x EV/EBITDA, and 3) RoE/RoCE of 16%/12% -- by FY24E. The target price of Rs245/sh (implying 51% upside) is based on FY24E EV/EBITDA multiples of 4.5-5x for various segments.

Promoter/FII Holdings
Promoters held 51.8 per cent stake in the company as of 31-Dec-2021, while FIIs owned 19.69 per cent, DIIs 15.26 per cent.