GAIL India Ltd. reported higher than estimated Ebitda of Rs 38.2 billion (up 9% QoQ, our estimate: Rs 33.5 billion) while profit aftert tax came in at Rs 28.4 billion (up 18% QoQ, our estimate: Rs 24 billion).
Transmission and trading volumes grew 1% QoQ. GAIL India expects transmission volumes to grow by 12-15 million metric standard cubic metre per day in the next two years.
Going forward, we build in a 4.5/4% compound annual growth rate volume growth over FY24-26E in transmission and trading segments.
We downgrade our rating from ‘Hold’ to ‘Reduce’ and value it at 12 times FY26 adjusted earnings per share of 10.8 and the value of listed and unlisted investment at Rs 27 to arrive at our target price of Rs 157 (previous target price Rs 155).
