Positive developments on the vaccine front have raised expectations of a recovery in demand for oil and gas and related products. GAIL Ltd, a leading upstream gas company in India, is naturally expected to gain. Investors had started taking cues from a better-than-expected Q2 performance itself, when there was a marked improvement in profitability in various segments. Not surprisingly, the stock has gained around 46% since its October lows and is seeing regular earnings upgrades from analysts.
Prospects for gas demand in the country already remain strong. Though 2020 may have seen lockdown woes and has not been much of a favourable year, uptick from hereon is expected. The requirement for cleaner and cheaper fuel by industrials and automobiles, and expanding pipeline infrastructure and city gas distribution network expansions bode well for the company.
The demand outlook for other oil commodity segments is also favourable. The petchem (petrochemicals) segment turned profitable in Q2 itself, after losses in Q1, as volumes surged with the progressive lifting of curbs.
