GAIL’s Q4FY20 standalone revenue declined 5.4 per cent year on year to Rs 17,755 cr, impacted by weaker pricing and nationwide lockdown. EBITDA rose 47.0 per cent year on year to Rs 2,475 crore, along with expansion of EBITDA margin by 497 bps year on year to 13.9 per cent. EBITDA growth was majorly driven by lower operating costs. Reported PAT grew 168.9 per cent year on year to Rs 3,018 crore, further helped by deferred tax reversal of Rs 1,588 crore.
Investment Rationale
The brokerage expects the recovery in oil and gas prices and revival of the economy after the lockdown. The company should also benefit from the potential contribution from new pipelines. The Department of Telecommunication will withdraw the claim of Rs 1.83 lakh crore from GAIL. Given these positive catalysts and current upside potential, the brokerage has upgraded its rating to buy on the stock with a revised target price of Rs 119 based on the sum of the parts (SOTP) valuation.
Financials
For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 17922.79 crore, up 0.22 per cent from last quarter sales of Rs 17882.74 crore and down -5.99 per cent from last year's same quarter sales of Rs 19065.47 crore. The company reported net profit after tax of Rs 4157.16 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 52.05 per cent stake in the company as of March 31, 2020, while FIIs held 16.30 per cent, DIIs 26.63 per cent and public and other 5.02 per cent.
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