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Brokerages turn bullish on GAIL India stock, here's why

The share has delivered 71 per cent returns in the last 12 months and risen 33 per cent since the beginning of this year

twitter-logoBusinessToday.In | June 11, 2021 | Updated 16:38 IST
The share has delivered 71 per cent returns in the last 12 months and risen 33 per cent since the beginning of this year.
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GAIL India share rose more than 2 per cent to hit an intraday high of Rs 167.75 after brokerages maintained their bullish stance on the stock post announcement of March quarter earnings.

The stock ended marginally higher at Rs 163.70 against the previous close of Rs 163.45 on BSE. Market cap of the firm rose to Rs 72,689.11 crore.

The share has delivered 71 per cent returns in the last 12 months and risen 33 per cent since the beginning of this year.

Share of GAIL India stands higher than 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.

CLSA has raised the FY22-23 EPS estimate by 2-3%. It has a 'Buy' call on the stock with a target price of Rs 200 per share.

The brokerage house is confident that the company's performance will improve in FY22 due to a rise LNG prices.

Motilal Oswal has a 'Buy' call too with a target price of Rs 210 per share.

"With ever-increasing gas demand in India, transmission pipelines would play a critical role in connecting both imported and domestically produced gas with consumers. This would encourage the development of new pipeline infrastructure in the country," the brokerage house said.

"We increase our FY22/23E earnings by 10.8 percent/1.7 percent to incorporate higher petrochemicals and LPG realisation. Sharp recovery in commodity prices in-line with recovering economy, augurs well for GAIL," Prabhudas Lilladher said.

The brokerage firm has a 'Buy' rating on the stock with a target price of Rs 184 per share.

Credit Suisse has maintained a "Neutral" rating on the stock and raised the target price to Rs 165 per share.

GAIL India posted a 28.3 percent rise in net profit to Rs 1,908 crore for the quarter ended March 2021. Profit in the previous quarter stood at Rs 1,487.3 crore.

Revenue from operations declined marginally to Rs 15,449 crore against Rs 15,454.3 crore. Earnings before interest, tax, depreciation, and amortization (EBITDA) grew 28.4 percent to Rs 2,465 crore. Net margin rose 16 per cent as compared to 12.4 per cent in Q3.

The petrochemical business has shown better performance with more than 100 per cent capacity utilisation. Sales increased by 18% to 871 TMT, The Petrochemical plant recorded the highest ever production of 813 TMT.

"The operations of the plant and pipelines were stable and no major shutdown took place during FY 2020-21. During the year, the company's Capex was Rs. 6,982 crore mainly on Pipelines. GAIL has taken several initiatives to support the employees, society, and the nation to combat the COVID-19," said Mr. Manoj Jain, CMD, GAIL.

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