GAIL India share price rose more than 4 percent intraday on February 11 after the company posted better-than-expected numbers in the quarter ended December 2019.
The company's Q3FY20 standalone net profit rose 17.5 percent at Rs 1,250.6 crore against Rs 1,064.2 crore in the quarter ended September 2019.
Revenue of the company was down 1.5 percent QoQ at Rs 17,769 crore.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 32.7 percent at Rs 2,072.5 crore and EBITDA margin was up 300 bps at 11.7 percent, QoQ.
CLSA | Rating: Buy | Target: Rs 180 per share
The company's profit was 11 percent ahead of expectations. All the segments other than LPG production outperformed the forecasts.
Q4 performance should not vary much QoQ due to effective hedging.
The higher gas transmission volume and 50 percent cut in domestic gas price are the key triggers.
Inclusion of gas in GST and change to a unified tariff regime are also key triggers.
Credit Suisse | Rating: Outperform | Target: Rs 171 per share
The company posted strong numbers in Q3, while transmission volume growth pick-up can drive rerating.
The Q3 EBITDA beat estimates by 14 percent due to higher margin in gas trading & petchem segments.
The traction in volume growth for transmission segment is a key for re-rating of the stock. Another catalyst for the stock is reduction in APM gas prices by 26 percent from April 2020.
According to Jefferies, the performance was strong across most segments, while LPG is a drag, but transmission volumes rose to an 8-year high.
The trading was rebounded and petchem did well in a challenging macro.
Jefferies lifts FY20 EPS estimates by 5 percent to reflect the strong Q3.
At 09:55 hrs, GAIL India was quoting at Rs 126.20, up Rs 4.40, or 3.61 percent on the BSE.