Sell GAIL (India), target Rs 405 : CLSA

CLSA has a sell call on GAIL (India) Ltd. with a target price of Rs 405 .The current market price of GAIL (India) Ltd. is Rs 420.55 Time period given by analyst is year when GAIL (India) Ltd. price can reach defined target. CLSA raised its 12-months target price to Rs 405 from Rs 360 earlier. The Ebitda was 7 per cent higher due to higher gas transmission and LPG profits. The company highlighted that the petchem plant has achieved 90 per cent utilisation in Oct-16. CLSA sees 13 per cent increase in FY17-18CL EPS as plant ramp-up happening earlier than expectations. GAIL's mispriced 5.8mtpa US LNG import commitment remains big unaccounted risk starting 2018, said the CLSA note. Given the expectation that the return on equity (ROEs) will stay well below the cost of equity, GAIL's1.7x FY17CL PB is unsustainable.