Analyst Corner: GAIL excellent investment opportunity; maintain ‘buy’
During 9MFY20, GAIL’s performance was hampered by poor gas trading, petrochemicals and LPG business. However, the transmission business fared well owing to increase in implied transmission tariffs. The management has guided for incremental volumes of ~2mmscmd from Ramagundam, ~2.5mmscd from Matix, and ~4mmscmd from Kochi-Mangalore pipeline from 1QFY21, and 8-9mmscmd in Jagdishpur-Haldia pipeline in FY22, which reiterates our thesis from our earlier note. This company guides that with the start of all fertiliser plants, no US HH contract would be sold outside India. Trading at ~40% discount to long-term 1-year forward P/E of 14.0x, GAIL offers an excellent investment opportunity.
