STOCK IN FOCUS
* We believe that gas pipeline segment will provide stable earnings mainly due to revised pipeline tariffs and improving gas transmission volume.
* In a Lower spot LNG price environment, the company’s gas trading segment likely to make higher margins in 2QFY20.
* We believe that GAIL’s utility business will continue to get higher valuation multiples on stable earnings.
* Petrochemical plant was shut down for preventive maintenance in 1QFY20. Now, the plant has been restored to normal operations at PATA, which produced a record volume of 78 TMT in Jul’19.
* The Company expects the plant to operate at full capacity (100% utilisation level) in remaining period of the fiscal.
* At CMP, the stock trades at 5.4x of FY21E EBITDA, which is at discount to its long-term average of 7.4x. We recommend “BUY” on the stock with Target Price of Rs155.
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