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GAIL: Navratna material - Views on News from Equitymaster
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  • Feb 2, 2001

    GAIL: Navratna material

    For the current quarter Gas Authority of India Ltd. (GAIL) has reported a moderate increase in topline as compared to the two previous quarters wherein the company reported a significant rise in turnover. This could be due to its petrochemical plant in U.P stabilising operations in 3QFY00. Consequently, YoY the effect of new operations is nullified in 3QFY01.

    (Rs m) 3QFY00 3QFY01 Change 9m FY00 9m FY01 Change
    Sales 23,252 24,992 7.5% 60,260 74,808 24.1%
    Other Income 184 296 60.9% 1,240 875 -29.4%
    Expenditure 19,125 19,831 3.7% 49,164 59,275 20.6%
    Operating Profit (EBDIT) 4,127 5,161 25.1% 11,097 15,533 40.0%
    Operating Profit Margin (%) 17.7% 20.7%   18.4% 20.8%  
    Interest 421 437 3.8% 1,285 1,333 3.7%
    Depreciation 1,242 1,255 1.0% 3,714 3,881 4.5%
    Profit before Tax 2,647 3,765 42.2% 7,338 11,195 52.6%
    Tax 438 950 117.1% 990 3,000 203.0%
    Profit after Tax/(Loss) 2,210 2,815 27.4% 6,348 8,195 29.1%
    Net profit margin (%) 9.5% 11.3%   10.5% 11.0%  
    No. of Shares (eoy) 846 846   846 846  
    Diluted Earnings per share* 10.5 13.3   9.4 12.1  
    P / E Ratio   4.4     4.8  

    The operating profits, however, have shown an impressive growth. This is due to the significant rise in OPM, which increased by 300 basis points. The OPM has increased YoY in all the three quarters. This could be due to greater control on operating costs in their pipeline business. Further, margins may have been positively impacted with the commissioning of the petrochemical (polymer) plant. GAIL operates a gas cracker, which involves lower operating costs as compared to naphtha crackers.

    Tax liability incurred by the company has made a sizeable jump in the current fiscal. Consequently, the profits have been impacted.

    The company has capitalised Rs 1 bn of forex fluctuation costs on repayment of foreign debt. Whether this amount should be passed through the income statement is being referred to the ICAI. On adjusting this amount the bottomline for 9 months still shows a growth of 13.3% YoY.

    At Rs 58 the company is trading at an earnings multiple of 4.4 on 3QFY01 annualised earnings. On a 9 month time frame it trades on a multiple of 4.8x annualised earnings.



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