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Informist, Friday, Jul 26, 2024

By Sayantan Sarkar

NEW DELHI – GAIL (India) Ltd is expected to clock a 52% on-year rise in its net profit for the June quarter on the back of higher transmission volumes and an uptick in the petrochemical business, analysts said. Net profit is expected to have risen to 21.41 bln rupees in Apr-Jun, according to estimates of 10 brokerages. 

The company's performance during the June quarter is likely to have been robust due to a rise in the transmission segment, led by higher volumes and tariffs, coupled with an uptick in the petrochemical segment from higher utilisation and softening liquefied natural gas prices, Nuvama Wealth Management said in a report. 

However, the gas company's net profit is expected to have fallen slightly by nearly 2% from the last quarter. Among the estimates, the highest and lowest projections for net profit are 23.93 bln rupees and 18.84 bln rupees, respectively. 

The company's total revenue is likely to rise 4% on a year-on-year basis and 3% sequentially to 334.11 bln rupees for the June quarter. The estimates are in the range of 320.91 bln rupees to 359.26 bln rupees. 

GAIL's cash profits from operations or earnings before interest, taxes, depreciation and amortisation is expected at 36.50 bln rupees for the quarter ended June, according to projections from nine brokerages. The company is scheduled to announce its results for the June quarter on Tuesday. 

According to Nirmal Bang Institutional Equities, healthy volume growth in natural gas transmission and a surge in marketing, driven by oil-linked gas sales contracts are likely to aid the company's bottomline during the reporting quarter. "We expect Petchem EBITDA to revive from a loss of 1.7 bln rupees in 1QFY24 to a profit of 3.26 bln rupees on the back of 14.4% YoY growth in volume (on the back of ramp-up in utilisation to at least 90%) as well as stable gas feedstock price, which is likely to offset weaker polymer spreads," the brokerage said. 

Brokerage Prabhudas Lilladher expects GAIL's natural gas transmission volumes to reach 127 mln standard cubic mtr per day, and trading volumes are estimated at 102 mscmd. GAIL's natural gas transmission is expected at 128 mscmd during the June quarter compared with 116.3 mscmd during the same quarter last year, according to Kotak Institutional Equities. Gas sales volumes are also likely to rise to 105 mscmd in Apr-Jun against 98.8 mscmd in 2023, Kotak said in a report. 

According to Motilal Oswal Financial Services, GAIL's petrochemical volumes are likely to be 212,600 tn. The brokerage said potential gas price-related tariff hikes and updates on progress of ongoing pipeline projects remain key monitorables.  

Following are the Apr-Jun earnings estimates, in mln rupees, of GAIL (India) based on reports compiled by Informist from 10 brokerage houses:

End

Edited by Deepshikha Bhardwaj

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