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GAIL: Margins on the rise

Nov 21, 2000

Gas Authority of India Ltd. (GAIL) has shown a healthy growth in its topline. The company has commissioned its petrochemical unit, which has contributed to the growth.

(Rs m) 2QFY00 2QFY01 Change
Sales 21,025 25,824 22.8%
Other Income 949 270 -71.5%
Expenditure 16,856 20,287 20.4%
Operating Profit (EBDIT) 4,169 5,537 32.8%
Operating Profit Margin (%) 19.8% 21.4%  
Interest 438 454 3.7%
Depreciation 1,343 1,448 7.8%
Profit before Tax 3,338 3,906 17.0%
Tax 553 1,320 138.9%
Profit after Tax/(Loss) 2,785 2,586 -7.2%
Net profit margin (%) 13.2% 10.0%  
No. of Shares (eoy) 846 846  
Diluted Earnings per share* 13.2 12.2  
P / E Ratio   3.6  
*(annualised)      

The company's OPM has increased by 160 basis points, which has resulted in the company reporting a strong growth in operating profits. In fact, the OPM has increased QoQ.

Although the pre-tax profits have improved substantially the company's tax liabilty has more than doubled resulting in a drop at the PAT level.

GAIL has recently commissioned the first part of its Jamnagar - Loni liquified petroleum gas (LPG) pipeline. The entire pipeline is expected to be commissioned by end of FY01. The pipeline will have a capacity of transporting 2.5 m tonnes of LPG and will feed LPG to five states. It plans to set up 2 more pipelines in the South.

At Rs 43.5 the company is trading at an earnings multiple of 3.6 on 2QFY01 annualised earnings.


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