GAIL - Research Report

 

GAIL is a A /T+2 group Gas Transmission/Marketing company having Face value of Rs 10.00. GAIL (India) Ltd is India's flagship natural gas company integrating all aspects of the natural gas value chain including Exploration & Production Processing Transmission Distribution and Marketing and its related services. The company has an interest in the business of natural gas LPG Liquid Hydrocarbons and Petrochemicals and have also diversified into Exploration & Production City Gas Distribution and are steadily developing their overseas presence.

Fundamentals (FY22-23):

CMP	98
52 - week high	Rs. 115
52 – week low	Rs 83
Dividend yield (consolidated)	100.00%
ROCE	21.37%
BVPS	86.33
Revenue	92769.83 cr.
Debt to Equity	0.14
P/E ratio	6.17
EPS	15.85
P/B ratio	1.13
Market Cap	64,304 cr.
Face value	Rs. 10.0

Financial Results:

Company’s Net Sales Rs 38,680.36 crore in September 2022 up 77.58%, Quarterly Net Profit at Rs. 1,315.11 crore in September 2022 down 54.39% and Rs. 2,144.81 crore in September 2022 down 44.95% compared to September 2021.

List of recent updates regarding the company:

1. GAIL will diversify its business into the specialty chemicals business, explore the possibility of taking equity in energy exchange and pursue acquisitions in solar glass and module manufacturing besides setting up of wind, and solar power plants, including Round the Clock power generation through storage system.
2. The company will set up ethanol manufacturing plants to produce green fuel from biomass that can be mixed with petrol.
3. Recently it kicked off the nation's first project for blending hydrogen into the natural gas system. Hydrogen-blended natural gas is being supplied to one of the company's joint ventures - Avantika Gas Ltd (AGL) which retails CNG to automobiles and piped cooking gas to households in Indore, Madhya Pradesh.
4. GAIL has awarded a contract to Cummins in collaboration with Tecnimontfor setting up one of the largest Proton Exchange Membrane (PEM) electrolyzers in the country to produce green hydrogen by the end of 2023. It will produce around 4.3 tonnes of hydrogen per day (about 10 megawatts capacity) with a purity of about 99.99 per cent. The project would be installed at the company's Vijaipur Complex, in the Guna district of Madhya Pradesh, and would be operated on renewable power.
5. The firm is also laying natural gas truck pipelines to create a national gas grid as well as expand city gas distribution as part of the government's target of more than doubling the share of natural gas in the primary energy basket to 15 per cent by 2030.

In past three year the stock gave a return of 22.96% as compared to Nifty which gave a return of 49.93% and 22.71% return compared to 48.12% rise in Sensex.

GAIL is the third highest dividend yield stock. The government-owned firm's latest dividend payout is 36.23% while its latest dividend per share is around ₹10 in FY22 and in last 5-year average return is 13.31%. Recently, GAIL has sought shareholder approval to increase the authorized share capital of the company to Rs 10,000 crore from the current Rs 5,000 crore to help raise finance for its expansion plans over the next 3-4 years. Company’s new growth driven strategies in futuristic  business segment will help it to range higher in upcoming years and will continue to contribute to its future growth too and considering this the stock is recommended for long term period.

HET ZAVERI

info@smartinvestment.in

 

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