Q2 Results: GAIL’s Profit Misses Estimates Dragged By Marketing Arm

GAIL (India) Ltd.’s quarterly profit missed estimates on the back of lower-than-expected earnings in its marketing segment.

Net profit declined 17.34 percent over the preceding quarter to Rs 1,064.25 crore in the three months through September, India’s largest gas distributor said in an exchange filing. Analysts’ estimates compiled by BloombergQuint had pegged the metric at Rs 1,460 crore.

Revenue fell 1.47 percent sequentially to Rs18,041.06 crore—but was in line with the Rs 18,880-crore forecast. The company’s operating profit plunged 31 percent to Rs 1,562.69 crore—lower than the Rs 2,139-crore estimate. Operating margin contracted to 8.66 percent from 12.3 percent in the quarter ended June.

Operating profit of the company’s LNG marketing segment declined 72.18 percent to Rs 236.6 crore on a sequential basis on the back of lower spot LNG prices and higher U.S. gas prices. The segment’s EBIT margin contracted to 1.56 percent from 5.50 percent in the first quarter.

Shares of GAIL (India) fell as much as 4.4 percent after the earning announcement. That compares with a 0.35 percent fall in the benchmark NSE Nifty 50 Index.

Segment-Wise Performance (QoQ)

• Other income rose three times to Rs 440 crore.
• Revenue of petrochemicals business rose 45.5 percent to Rs 1,619.16 crore.
• Revenue from LPG business fell 16.15 percent to Rs 960.53 crore.
• Ebit margin of transmission business contracted to 56.09 percent from 57.05 percent.
• LPG segment’s Ebit margin, too, contracted to 25.54 percent from 44.58 percent.