Motilal Oswal: GAIL India Q1 Review - Pain In Gas Trading Hurts Profitability; Should Abate In FY22E
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Motilal Oswal Report
GAIL India Ltd. reported lower-than-estimated Ebitda, led by poor performance in gas trading, petrochemicals and liquefied petroleum gas hydro carbons.
With revival in crude oil prices, we believe these segments would remain lucrative for the company in the coming quarter. Currently, GAIL India is operating at approximately 95% of FY20 (trading and transmission) volumes and the company expects it to normalise to pre-Covid-19 levels in another two months.
Currently, volumes stand at 109.5 million metric standard cubic meter per day for transmission and 87.2 million metric standard cubic meter per day for trading.
Also, demand from fertilizer and power is stabilizing again. However, some delay is expected in the start-up of plants (Matix Fertilizer and Chemicals Ltd., Ramagundum Fertilizers and Chemicals Ltd. and Mangalore Chemcials and Fertilizers Ltd.), owing to Covid-19 led reasons.
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