CLSA has buy on GAIL India, target price Rs 180

CLSA has a buy rating on GAIL India in the long term with a target price of Rs 180. Shares of GAIL ended down 0.9% at Rs 126.7 on Tuesday while the BSE Sensex closed 205.10 points (0.49%) down at 41,323.81.

Company FInancials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 18235.45 crore, down -1.26% from last quarter sales of Rs 18467.44 crore and down -5.73% from last year same quarter Sales of Rs 19342.88 crore. The company has reported net profit after tax of Rs 849.27 crore in the latest quarter.

The company’s top management includes Dr.Anup K Pujari, Dr.Ashuotsh Karnatak, Dr.Rahul Mukherjee, Mr.A K Tiwari, Mr.Ashish Chatterjee, Mr.Dinkar Prakash Srivastava, Mr.Gajendra Singh, Mr.Jayanto Narayan Choudhury, Mr.Manoj Jain, Mr.P K Gupta, Mr.Rajiv Bansal, Mrs.Banto Devi Kataria. Company has ASA & Associates LLP as its auditors. As on 31-12-2019, the company has a total of 4,510,141,866 shares outstanding.

Investment Rationale

GAIL is trading near its 10-year low PE and at a sub-6 times core PE, stripping off the value of investments, said CLSA. Being a leveraged play on India’s gas demand story with volume picking up in 2020, CLSA sees GAIL as an attractive buy. Any plans of unbundling gas transmission may be positive in the short term as the demerged valuation may be much higher than implied by its current stock price, said CLSA.