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Buy GAIL (India); target of Rs 150: YES Securities
YES Securities is bullish on GAIL (India) has recommended buy rating on the stock with a target price of Rs 150 in its research report dated May 19, 2023. GAIL reported 4QFY23, significantly below estimates, with adjusted operating profit at Rs 3.1bn (-92% YoY; -77% QoQ), primarily on weaker than estimated earnings in gas transmission and petrochemical segment. Gas transmission segment reported a pre-tax loss of Rs 164mn due to one-time provision of Rs 1.10 related to rerouting of TN section of KKMBPL and due to higher SUG expense as APM allocation for SUG got incrementally reduced by 0.5mmscmd during the quarter. GAIL’s p/l tariff was recently (Mar’23) revised upwards to Rs 58.6/mmbtu, however given notified tariff factors for a lower price (than the prevailing prices) for APM & HPHT gas to be used as SUG, GAIL is of the view that tariffs need further upward revision to factor for the same. In light of the revised NGPL tariff regulations (Nov’22), the cost of SUG as fuel is recoverable as operating cost and therefore, we foresee a high probability for revision in pipeline tariff to adjust for the same. Going ahead, with moderation in domestic gas and LNG prices, the business for GAIL appear to be improving across segments. Maintain BUY. Source - Money Control
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