Tag: GAIL

GAIL shares get their highest target from Morgan Stanley; Brokerage says market cap may double by 2026

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of GAIL India Ltd. are trading at a record high on Monday. The stock inched nearly 4% higher as investors cheered global research and broking firm Morgan Stanley’s positive commentary on the PSU.

The foreign brokerage gave an ‘overweight’ rating to the GAIL India stock with an increased target price of ₹254 from ₹213 per share earlier.

The revised price target from Morgan Stanley suggests a potential upside of approximately 33% from the previous day’s closing price. This is also the highest price target for the PSU on the street.

At 10.33 am, GAIL shares were trading at ₹197.20 on the National Stock Exchange, up 3.38% from its previous close. The stock has risen nearly 20% so far this year.

According to Morgan Stanley, GAIL (India) Ltd.’s market capital could double by 2026 as the share of natural gas in the country’s primary energy mix gains twice over in the current decade.

GAIL is in a sweet spot as India targets 2.7 times higher gas demand by 2030 — the fastest-growing fossil fuel in the country, the brokerage said in its note. The PSU has also invested $7 billion in pipeline infrastructure in the past decade and $1 billion in chemicals to profit from India’s new growth norm in energy and infrastructure demand.

Morgan Stanley said the global gas glut is intersecting with India’s potential $65 billion in gas infra investments. Thus, gas is set to double in India’s primary energy mix from 6% to 12% by 2030e.

Also, the brokerage sees EBITDA doubling and a 13% earnings CAGR in the next three years.

GAIL’s first $15 billion in market capitalisation creation took 40 years as it supplied 100 mmscmd of gas, and the next 100 mmscmd could happen four times faster, the brokerage noted.

Shares of GAIL have risen nearly 90% in the last year. Of the 35 analysts tracking the company, 20 maintain a ‘buy’, eight recommend a ‘hold,’ and seven suggest a ‘sell’, according to data from Bloomberg.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GAIL plans retail LNG foray with ₹650 crore investment, plans to capture 50% market share in six years

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-run GAIL is planning a foray in the retail Liquefied Natural Gas (LNG) sector by increasing the use of LNG as a transportation fuel, it said in an exchange filing.

The company plans to invest ₹650 crore for this foray and it aims to capture 50% market share in this space in the next five to six years.

“LNG business has the potential to grow substantially,” the company said in a statement.

GAIL plans to set up LNG dispensing stations across the golden quadrilateral project and across major national highways.

“GAIL can take a central role in driving this growth and aspire to capture 50% market share in the next five-to-six years,” the company said.

The company also plans on reducing its carbon footprint by converting transport fuel from diesel to LNG.

“The proposed investment is strategic in nature which relates to exploring opportunity-based investment for the development of LNG dispensing infrastructure & last mile connectivity,” the company said.

Shares of GAIL are trading 3.8% higher at ₹175.05. The stock has risen 60% in the last 12 months.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

₹150 or ₹215? GAIL share price targets post analysts meet; all eyes on new energy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gas Authority of India Limited (GAIL) held an analysts meet where most of them visited the company’s Vijaipur plant to get an insight into its traditional gas transmission business along with the new projects — Green hydrogen plant and small-scale LNG plant operation.

Following the analysts meet, GAIL has seen a couple of brokerages trimming their price targets and ratings on the stock while others maintaining their calls.

For instance, Nuvama analysts have issued a ‘Hold’ call on GAIL, setting a target price of ₹151 per share.

Motilal Oswal analysts remain positive on GAIL as the capex cycle unwinds. “The company has continued to explore new avenues for investments such as green hydrogen, SSLNG, and even coal to gas/chemicals. At 11 times FY26 P/E (price-earnings) and the current dividend yield of 2%, we believe valuations remain reasonable,” it said while retaining a ‘Buy’ call on the stock and a target of ₹215 per share.

CLSA’s outlook on GAIL is more neutral. They have downgraded the stock to ‘Sell’ and assigned a target price of ₹165 per share on slow earnings per share (EPS) growth. The foreign brokerage sees limited potential for rerating and anticipates subdued EPS growth, suggesting a cautious stance on GAIL’s performance in the near term.

Jefferies also has an ‘Underperform’ recommendation on the stock with a target price of ₹150. Analysts will keenly watch the company’s progress towards target of blending 20% green hydrogen in transmission volume by 2040, the broking firm said.

GAIL: Takeaways from analysts meet

Nuvama Institutional Equities, which attended GAIL (India) Ltd’s analyst meet, said GAIL’s HVJ pipeline stays within the key national gas grid, which is 60% of the total transmission network. However, the capacity utilization there remains low, which is worrying the analysts.

The broking firm also said that GAIL is setting up a green hydrogen plant with capacity of 4.3 tones per day at a capex of ₹230 crore. This would mean the cost of Green hydrogen could be $2.5 per kg, making it comparable to grey hydrogen.

GAIL has also begun blending 2% hydrogen with CNG and 5% with PNG on a pilot basis and is in the process of setting up its first LNG dispensing station at Vijaipur.

“GAIL is a diversified play on India’s gas consumption with growth driven by gas transmission, trading volume growth and high petchem capacity. However, low utilisation of pipeline and cyclical nature of the petchem business remain key challenges,” Nuvama said in its latest note to clients.

But despite the challenges, initiatives towards becoming net zero by 2040 led by hydrogen blending, green hydrogen production, setting up CBG plant and LNG dispensing stations provide it an edge, the brokerage added.

The year 2023 turned out to be the best year for GAIL’s shares since 2009 as the stock stepped on the gas, delivering returns of about 70%.

The PSU stock has gained 10% so far in 2024. At 12:23 pm, the stock was quoting at ₹183.40 on the NSE, down by 2.73% from previous close.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IOC, GAIL, ONGC fined for third straight quarter for failure to appoint directors

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-owned oil and gas giants including IndianOil, ONGC and GAIL (India) have been slapped with fines for the third straight quarter for failing to meet listing norm requirements of having the requisite number of directors on their board.

Stock exchanges have fined oil refining and fuel marketing giant Indian Oil Corporation (IOC), explorers Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), gas utility GAIL, and refiners Hindustan Petroleum Corporation Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) a cumulative ₹ 32.5 lakh, stock exchange filings showed.

In separate filings, the companies detailed the fines imposed by the BSE and NSE for either not having the requisite number of independent directors or the mandated women director in the third quarter ended December 31, 2023, but were quick to point out that appointment of directors was done by the government and they had no role in it. The companies had faced fines for the same reason in the previous two quarters as well.

The six PSUs in separate filings said they have been slapped with a fine of ₹5,42,800 each for the third quarter. While ONGC and its subsidiaries HPCL and MRPL, GAIL and OIL faced fines for not having the required number of independent directors on their board, IOC for not having a woman independent director on their board.

Listing norms require companies to have independent directors in the same proportion as executive or functional directors. They are also required to have at least one woman director on the board.

For the second quarter, IOC, ONGC, OIL, GAIL, Bharat Petroleum Corporation Ltd, HPCL and Engineers India Ltd had faced a fine of ₹ 5.42 lakh.

For the latest fine, IOC in the regulatory filing said that “being a government company, the power to appoint directors (including independent directors) vests with the Ministry of Petroleum and Natural Gas, Government of India, and hence the non-appointment of women independent director on the Board during the quarter ended December 31, 2023, was not due to any negligence/fault by the company.”

Accordingly, IOC said it should not be held liable to pay the fines and the same should be waived off.

“IOC regularly takes up with ministry for appointment of requisite number of independent directors (including woman independent director) to ensure compliance with corporate governance norms enunciated under SEBI (LODR) as well as the Companies Act,” it said, adding, it had in the past received similar notices from the two stock exchanges and its waiver request was granted. GAIL in the filing said, “Appointments are outside the purview/control of the GAIL’s management.”

“The non-compliance with regard to the composition of the Board was not within the control of the company and the company has been regularly pursuing with the Government of India (GoI) for appointment of requisite numbers of independent directors to meet the compliance requirements,” ONGC said.

The appointment of directors on its subsidiaries HPCL and MRPL too are done by the government. “The company is following up with the government from time to time for appointing the required number of directors on its board and GOI is seized of the matter,” HPCL said.

MRPL said it has been continuously following up with the ministry for the appointment of a requisite number of independent directors on the Board and “the same has been under active consideration” of the ministry.

Stating that the non-compliance was beyond the control of the company, OIL said it has requested the ministry for appointment of independent directors on the Board of the company to comply with Regulation 17(1) of the SEBI (LODR) Regulations, 2015.

The companies had cited similar reasons and remedial action when they had faced fines for non-compliance in the previous two quarters. IOC, ONGC, OIL, GAIL, BPCL, HPCL and Engineers India Ltd were slapped with a uniform ₹5,42,800 fine for the second quarter as well.

For non-compliance in the April-June quarter, ONGC was slapped with ₹3.36 lakh fine, IOC ₹5.36 lakh and GAIL ₹2.71 lakh fine. HPCL and BPCL were asked to pay ₹3.6 lakh fine each, while Oil India had faced a penalty of ₹5.37 lakh.

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GAIL to purchase 4.5 MMTPA of LNG from Petronet under renewed contract with QatarEnergy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-owned GAIL India Ltd on Tuesday (February 6) said it will offtake about 4.5 MMTPA (million metric tonnes per annum) of LNG from Petronet LNG Ltd (PLL), which has executed a renewal of a 7.5-MMTPA LNG long-term contract with QatarEnergy.

Under the renewed LNG SPA (sale and purchase agreement), GAIL India will be offtaking its share (i.e. 60%) of the volumes on a substantially back-to-back basis.

Meanwhile, India’s largest gas importer Petronet LNG Ltd (PLL) has successfully concluded and executed an LNG sale and purchase agreement (LNG SPA) for the purchase of around 7.5 MMTPA LNG with QatarEnergy on a long-term basis.

This is under the extension of an existing LNG SPA for LNG supply of around 7.5 MMTPA LNG sale and purchase agreement on a FOB basis, signed on July 31, 1999, for supplies till 2028. Under the new agreement, LNG supplies will be made on a delivered (DES) basis, commencing from 2028 till 2048.

Similar to the earlier agreement of 1999, the LNG volumes under the new SPA shall also be offtaken by GAIL India (60%), Indian Oil Corporation Ltd (30%) and Bharat Petroleum Corporation Ltd (10%) after regasification primarily from Dahej Terminal of PLL on substantially back-to-back basis.

This LNG SPA between PLL and QatarEnergy will ensure the energy security of India and assure continued supplies of regasified LNG to major consuming, sectors like fertilisers, CGD, refineries and petrochem, power and other industries, the company added.

Shares of GAIL (India) Ltd ended at ₹181.50, up by ₹5.60, or 3.18%, on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GAIL shares surge even as analysts have mixed views on its prospects

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Analysts are divided over GAIL Ltd shares, as one of the brokerages projected gains of up to 16% while another sees a 21% decline in the bear case scenario.

Shares of gas utility GAIL rose by around 2% on Tuesday, January 30, to hit a 52-week high ₹177 apiece amid divided opinion by analysts.

Painting a bullish picture, global brokerage HSBC assigned a ‘buy’ rating on the stock and upgraded the target price to ₹200 per share. The target price implies a potential upside of 16% in the next 12 months.

HSBC in a report said that GAIL’s third-quarter earnings have beaten consensus and demonstrate demand momentum. Lower gas prices and new gas marketing contracts are set to drive higher transmission utilisation, HSBC noted.

Keeping a ‘neutral’ call on GAIL, JP Morgan upgraded its target price to ₹170 per share, marginally down from Monday’s close. The brokerage mentioned that the surprise Q3 numbers were driven by profitability in the petrochemical and LPG segments.

The gas company beat the full-year guidance of gas trading business EBITDA within nine months, it noted. GAIL has largely reversed a collapse in quarterly profits that it suffered last year and it will drive the re-rating of the stock, JP Morgan said.

However, two other analysts gave bearish calls on the gas utility.

Jefferies assigned an ‘underperform’ call with a target price of ₹150 per share, implying potential loss of 21% in the next 12 months. The brokerage mentioned that GAIL missed EBITDA estimates due to lower volume in transmission and trading. The Petchem segment turned profitable on operational leverage & cheap feedstock, it clarified.

“GAIL shares trade at more + 2SD over LT Fwd EBITDA.” it said, adding that it makes risk reward unfavourable.

Nuvama maintained a ‘hold’ rating on GAIL while raising its EBITDA estimate for FY25/26 period by 14%/25% respectively on improvement in gas trading and petchem profits.

The brokerage mentioned that GAIL is a diversified play on India’s gas consumption and low utilisation of pipelines and weak petchem stay key challenges.

“We raise FY25E/26E EBITDA by 14%/25%,” the brokerage said.

GAIL shares were trading 1.75% higher at ₹174.70 apiece on BSE at 10.27am.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GAIL Q3 Results: Net profit at ₹2,843 crore; ₹5.5 per share dividend declared

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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GAIL (India) Ltd, the country’s largest gas distributor, reported an almost 18% surge in quarterly profit on Monday, January 29, amid softening in liquefied natural gas (LNG) prices from last year. The state-owned gas company’s standalone profit stood at ₹2,842.62 crore in the quarter ending December 31, from ₹2,404.89 crore in the previous September quarter.

The state-owned firm’s profit figure was high than CNBC-TV18’s poll of ₹2,302 crore.

GAIL’s revenue from operations jumped nearly 8% to ₹34,253.52 crore, compared to ₹31,822.62 crore in the second quarter of this fiscal.

EBITDA or earnings before interest, taxes, depreciation and amortization stood at ₹3,822 crore as against CNBC-TV18 poll’s of ₹3,315 crore. Margins, meanwhile, rose 180 basis points to 11% versus our poll of 9.4%.

The state-owned firm has declared an interim dividend of ₹5.50 per equity share amounting to ₹3,616.30 crore. The said dividend will be paid on Tuesday, February 6, 2024.

“The Board of Directors of the company in its meeting held today i.e. 29.01.2024, inter-alia, approved the Unaudited Financial Results (Standalone and Consolidated) of the company for the quarter and nine months ended 31.12.2023 and the payment of interim dividend for the financial year 2023-24 (₹5-5O per equity share) on the paid-up equity share capital of the company,” it said.

Shares of the company rose nearly 4% to trade at ₹171.85 apiece on Monday after Q3 numbers.

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GAIL shares drop after CLSA downgrades stock to ‘underperform’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Gas Authority of India Ltd (GAIL) declined up to 2.6% on Thursday, January 11, after the brokerage CLSA downgraded its rating on the state-run firm to “underperform” from “buy” earlier, citing subdued earnings per share (EPS) growth.

The downgrade indicates a less favourable outlook on the stock.

Despite raising the target price to ₹165 per share, due to roll forward, CLSA sees limited potential for rerating and anticipates subdued earnings per share growth. This suggests a cautious stance on GAIL’s performance in the near term. The target price indicates an upside of 5.5% to Wednesday’s closing price of the stock at ₹155.85 apiece on BSE.

In 2023, GAIL’s stock witnessed a significant 70% jump primarily due to a combination of around 50% tariff hike and approximately 12% spike in transmission volumes.

However, it is noted that these favourable factors may not be present in 2024, leading to a potential absence of similar positive surprises and affecting the stock’s performance, CLSA said in its research note.

The Indian gas demand experienced a notable increase in 2023 due to a low base and certain one-off factors. Looking ahead, the forecast suggests a more moderate growth of 5%-6%.

Consequently, GAIL’s earnings per share compound annual growth rate (CAGR) over the next two years is expected to be below 5%, given the uncertainty in the consensus on petrochemicals. This implies a more restrained outlook for GAIL’s financial performance in the near term.

GAIL has around 70% market share in gas transmission and 50% in gas trading in India. It has a network of over 16,000 km of natural gas pipelines on a pan-India basis and is working on multiple projects to expand the network.

Earlier this month, GAIL and Vitol Asia Pte Ltd inked a long-term LNG agreement for the supply of around one million metric tonnes of LNG annually, spanning a decade, commencing in 2026. As per the terms of the contract, Vitol will distribute LNG from its worldwide portfolio to GAIL across India.

GAIL shares were trading 1.19% lower at ₹158.10 pershare at 10.50 am on Thursday, January 11.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GAIL shares recover from day’s low after signing long-term LNG deal with Vitol

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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GAIL and Vitol Asia Pte. Ltd. have signed a long-term LNG deal into India, the former said in an exchange filing. The deal is to supply approximately one million metric tonnes of LNG per annum for a period of ten years, starting 2026.

As per this deal, Vitol will deliver LNG from its global LNG portfolio to GAIL on a pan-India basis.

GAIL CMD Sandeep Kumar Gupta said that this deal will contribute to bridging India’s demand and supply gap of natural gas.

“India is a significant and growing LNG market and we are excited to bring LNG supply from our global LNG portfolio to meet this rising natural gas demand in India,” Vitol CEO Russell Hardy said.

GAIL is involved in multiple negotiations with various LNG suppliers for long-term deals, according to Sanjay Kumar, GAIL’s Director of Marketing.

GAIL has around 70% market share in gas transmission and 50% in gas trading in India. It has a network of over 16,000 km of natural gas pipelines on a pan-India basis and is working on multiple projects to expand the network.

2023 turned out to be GAIL’s best year in terms of share price returns since 2009. The stock had gained nearly 60% to surge to a record high.

However, Kotak Institutional Equities believes that the stock is running ahead of fundamentals due to optimism. As a result, the brokerage downgraded the stock to “Sell” from the earlier rating of “reduce.” However, it marginally raised its price target on the stock to ₹125 from ₹120 earlier.

Shares of GAIL are trading 0.5% higher at ₹163.95. The stock is off the day’s high.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GAIL’s recent surge driven by optimism not fundamentals, says Kotak Institutional Equities

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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2023 turned out to be the best year for GAIL’s shares since 2009 as the stock stepped on the gas, deliverying returns of nearly 70%.

However, Kotak Institutional Equities believes that the stock is running ahead of fundamentals due to optimism. As a result, the brokerage has downgraded the stock to “Sell” from the earlier rating of “reduce.” However, it has marginally raised its price target on the stock to ₹125 from ₹120 earlier.

GAIL is realising a tariff of nearly 18% to 20% higher compared to that approved by the PNGRB for its INGPL network, which is a positive, according to the Kotak Note. However, the rally is driven by optimism due to firming up of oil prices, record high gas consumption in India and optimism with regards to the transmission business.

The company’s petchem business has been reporting losses for the last five quarters and although the feedstock costs may fall in the second half of the current financial year, a return to profitability looks difficult, according to Kotak Institutional Equities. The brokerage expects the segment to see meaningful profits only in financial year 2026.

“For the LPG segment, profitability should return in the second half,” Kotak said in its note, but warned that the losses may return in the first half of financial year 2025. “Despite the weak profitability, GAIL’s further large capex in petchem has been a key worry,” the note said.

The brokerage has further increased the transmission volume assumptions by another 1% to 3% to 128 and 134 mmscmd respectively for financial year 2025 – 2026. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) estimates have also been raised by 1% and 2% despite a lower APM allocation and a 48% reduction in the KG basin pipeline tariff.

Interestingly, just last Friday, Motilal Oswal had chose GAIL as one of its top picks for 2024 with a price target of ₹195.

Despite GAIL’s capital expenditure growing by 64% over financial year 2024 – 2026, Motilal Oswal expects the company to report free cash flow of ₹4,560 crore in financial year 2026.

Shares of GAIL are trading 3.2% lower at ₹160.95.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow