Liquefied natural gas dispenses through pipes on board a tanker. (Photographer: Jason Alden/Bloomberg)

Q3 Results: GAIL India’s Profit Beats Estimates

GAIL (India) Ltd.’s profit for the December-ended quarter beat estimates due to higher revenue from its natural gas marketing and liquefied petroleum gas business.

Net profit slipped 14 percent quarter-on-quarter to Rs 1,681 crore, the state-run gas utility said in an exchange filing. That compares with the Rs 1,578-crore consensus estimate of analysts tracked by Bloomberg.

Revenue rose 2.7 percent to Rs 19,789 crore sequentially against the estimated Rs 18,986 crore. The company’s natural gas marketing business grew 3.5 percent to Rs 16,197 crore, while its LPG business raked in Rs 1,512 crore in revenue—an increase of 9.8 percent compared with the preceding quarter.

GAIL’s petrochemical business, however, failed to impress due to lower realisations and plant shutdowns. Revenue from the segment declined 9.7 percent quarter-on-quarter to Rs 1,599 crore.

Probal Sen, sector lead at research (oil & gas) at IDFC Securities, said the company has reported a strong set of numbers. He noted that some of the decline was expected due to ongoing tensions in the U.S. natural gas market.

Sen said that it might take the company some time to stabilise the petrochemical plant shutdown and such losses shouldn't be read as indicative of GAIL’s profitability going forward.

The natural gas distributor’s earnings before interest, tax, depreciation and amortisation fell 8.7 percent over the previous quarter to Rs 2,673 crore, while operating margin contracted 170 basis points to 13.5 percent. Analysts were expecting Ebitda of Rs 2,476 crore and margin of 13 percent.

The company also declared an interim dividend for financial year 2018-19 at 62.5 percent—or Rs 6.25 per share—on its paid up equity share capital.

Shares of the natural gas distributor fluctuated between gains and losses to trade little changed at Rs 329.40 after the earnings announcement.

Other Highlights (QoQ):

  • Revenue from transmission business fell 3.4 percent to Rs 1,626 crore.
  • Ebit margin of transmission business rose 200 basis points to 59.1 percent.
  • Ebit margin of petrochemical unit shrunk to 1.9 percent from 9.4 percent.
  • Ebit margin of natural gas marketing and LPG units contracted to 4.2 percent and 55.1 percent, from 6.7 percent and 55.7 percent, respectively.