HSBC, one of the world’s largest banking and financial services organizations. Gave a ‘buy’ recommendation on the Largest Natural Gas Company in India with an upside of 23 percent. The company stock closed at Rs 121.80 a share in Monday’s trading session.
At 1:25 p.m., on the National Stock Exchange, Gail (India) Ltd shares were trading at Rs 121.95, down 2 percent from the previous close.
The company’s shares have delivered returns of 14 percent in six months and 35 percent in a year.
The company’s revenue declined by 13 percent year on year, rising from Rs 37,896 crore in Q1FY23 to Rs 32,848 crore in Q1FY24. During the same time period, net profit decreased by 51 percent, from Rs 2,923 crore to Rs 1,416 crore.
In the recent fiscal year, the company reported a return on capital employed at 7.10 percent and a return on equity at 8.64 percent. Similarly, the Company reported a net profit margin of 2.80 percent.
Based on a strong outlook on GAIL Ltd. HSBC has given a target price of Rs 150, representing a 23 percent increase from Monday’s closing price.
The rationale behind providing such a recommendation is
● HSBC expects gas volume to grow and believes tariff growth and new gas marketing contracts should aid the profitability of the company.
● Analysts expect LNG Volumes and higher oil prices will also aid the company’s aid profit.
● HSBC estimates Q2 EBITDA growth of 31 percent and profit after tax growth of 66 percent QnQ.
GAIL (India) Ltd is engaged in natural gas exploration and production, processing, transmission, distribution and marketing, and related services. The company has diversified into petrochemicals, telecoms, and liquid hydrocarbons.
Written by Omkar Chitnis
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