Also Read- Flair share price hits 10% lower circuit after dream debut. Buy, wait or exit? Analysts at Motilal Oswal Financial Services said that moderate spot LNG prices are expected to have a positive effect GAIL's transmission business. GAIL’s performance during the September quarter already was robust with high earnings growth 70% sequentially led by super strong earnings from gas transmission and trading segments and narrowing down of loss in petchem segment.
Petchem segment outlook still remains weak as Chinese refiners have been increasing their petrochemical capacities which can keep maintaining pressure on petchem margins. However overall outlook for GAIL’s earning have improved with rising gas demand. Also Read- Hero Moto, BPCL, Coal India among top 5 gainers that helped Nifty scale new high Abhijeet Bora AVP at Sharekhan post Q2 results said that he expects GAIL to post a strong earnings recovery across its business segments supported by stabilising global LNG supplies and improving price environment for its commodity businesses.
Valuation of stock has remained reasonable given a steep discount as compared to the historical average and expectation of a strong earnings recovery and a healthy dividend yield of 4-5%. To be sure the domestic gas (APM Gas) allocation for GAIL needs to rise. GAIL is realizing much higher tariff (versus approved by PNGRB), and is a positive.
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