GAIL (India) Ltd (Q2 FY14)

India Infoline News Service | Mumbai |

GAIL reported transmission volumes of 95mmscmd lower than our expectations of 97mmscmd as gas production from the KG-D6 block and PMT continued to decline.

CMP Rs343, Target Rs370, Upside 7.9%

  • Net sales rise 22.9% yoy driven by higher revenues from the natural gas trading and petrochemical segments

  • Gas transmission volumes fall 10% yoy and 4.3% qoq as gas production volumes declined from KG-D6 and PMT blocks. Petrochemical segment sales volumes were higher by 6.9% yoy

  • OPM at 10.5% was lower by 194bps yoy and 124bps qoq

  • EBIT margins fell for all segments except natural gas trading; LPG and liquid hydrocarbon segment reported a negative EBIT on the back of higher than expected subsidy burden

  • Transmission segment margins were lower on the back of operating deleverage seen in both the segments

  • No subsidy burden for H2 FY14, estimates raised for FY14 and FY15

  • Gas price hike will impact petrochemical margins from FY15, Maintain Market Performer with a revised 9-month target price of Rs370

Result table
(Rs m)
Q2 FY14
Q2 FY13
% yoy
Q1 FY14
% qoq
Net sales
140,025
113,929
22.9
128,998
8.5
Material costs
(13,814)
(7,017)
96.9
(10,495)
31.6
Purchases
(99,132)
(83,005)
19.4
(92,693)
6.9
Personnel costs
(2,031)
(1,736)
17.0
(2,004)
1.3
Other overheads
(10,414)
(8,051)
29.3
(8,722)
19.4
Operating profit
14,634
14,120
3.6
15,084
(3.0)
OPM (%)
10.5
12.4
(194) bps
11.7
(124) bps
Depreciation
(2,888)
(2,491)
16.0
(2,808)
2.9
Interest
(1,082)
(261)
314.2
(612)
76.9
Other income
2,219
2,368
(6.3)
577
284.7
PBT
12,883
13,736
(6.2)
12,241
5.2
Tax
(3,726)
(3,882)
(4.0)
(4,159)
(10.4)
Effective tax rate (%)
28.9
28.3

34.0

Reported PAT
9,157
9,854
(7.1)
8,082
13.3
PAT margin (%)
6.5
8.6
(211) bps
6.3
27 bps
Ann. EPS (Rs)
28.9
31.1
(7.1)
25.5
13.3
Source: Company, India Infoline Research

Segmental
BSE 485.90 [1.05] ([0.22]%)
NSE 485.65 [1.45] ([0.30]%)

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