CMP: ₹216.95
In subsequent 3-4 years, we anticipate India’s fuel consumption to rise from 191mmscmd in FY24 to 218mmscmd. Whereas GAIL’s transmission would develop by 8 per cent c in FY24-26, buying and selling is predicted to develop a tad decrease (6 per cent). Petrochemical and LPG are anticipated to stay muted.
India’s trunk fuel pipeline community is predicted to rise from 23,391km in FY24-end to 27,516km within the subsequent 3-4years. GAIL’s personal community is predicted to rise from 16,240km to 19,970km (together with spur traces) within the subsequent 2-3years.
With already related shoppers (besides energy) consuming optimum quantity of fuel, and fewer new shopper additions, we anticipate GAIL’s transmission quantity to rise from 120mmscmd in FY24 to 130/140 mmscmd in FY25/26E. This contains seasonal enhance from the facility sector. Bringing pure fuel beneath the GST ambit would convey down fuel price and help quantity development too.
Nevertheless, more and more, shoppers are securing their contracts instantly, thereby dampening the anticipated development price in buying and selling. Incremental petrochem tasks are additionally margin dilutive. Contemplating the gradual development in transmission and low return ratios for petrochem expansions, we stay unfavourable on the inventory with a Promote score and goal value of ₹170, valuing it at 12x FY26 standalone EPS and including the worth of investments.
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