1:2 Bonus: BUY Maharatna PSU Oil & Gas Stock GAIL, Rs 255 Target By Motilal; Rs 6.5 Dividend Record Date Soon

1:2 Bonus: BUY Maharatna PSU Oil & Gas Stock GAIL, Rs 255 Target By Motilal; Rs 6.5 Dividend Record Date Soon

Maharatna PSU oil and gas giant, GAIL (India) joined the bandwagon of bearish trend by falling nearly 1% on Monday, after Budget. Nonetheless, the latest downfall brings a buy-on-dips opportunity as brokerage Motilal Oswal is the latest to recommend BUY for a highest target price of Rs 255. GAIL will be in focus this week due to its upcoming record date for dividend payout of Rs 6.5 per share.

GAIL (India) Share Price:

After the market hours, GAIL share price closed at Rs 174.45 apiece, down by 0.7% on BSE with market cap of Rs 1,14,702.61 crore. The stock’s 52-week high and low is at Rs 246.35 apiece and Rs 163.35 apiece respectively.

Motilal Oswal On Gail Share Price:

Post GAIL’s Q3 results, Motilal Oswal said, “GAIL’s 3QFY25 performance was significantly below our estimates, primarily due to weak gas marketing segment performance. While APAT came in 43% below our estimate, reported PAT was lifted by an exceptional income of INR24.4b booked during the quarter relating to the arbitration settlement with SEFE.”

The brokerage added, ” Transmission volumes were weaker QoQ due to a decline in power sector demand in 3Q, while adverse spread movement on some of the gas contracts led to lower profitability on some of the marketing contracts. Overall, management expects transmission volumes to grow by ~10mmscmd in FY26 and remains hopeful of tariff hike approval for the transmission business in 1QFY26.”

On the valuation, Motilal said they reiterate BUY rating on GAIL with a TP of INR255. During FY24-27, the brokerage estimates a 15% CAGR in PAT driven by:

– an increase in natural gas transmission volumes to 154mmscmd in FY27 from 120mmscmd in FY24;

– substantial improvement in petchem segment’s profitability over 2HFY25- FY27 as the new petchem capacity will be operational and spreads are bottoming out;

– healthy trading segment profitability with guided EBIT of at least INR45b.

“We expect RoE to improve to ~16% in FY26 from 9.5% in FY23, with a healthy FCF generation of INR81b in FY26 (vs. -INR45.3b in FY23), which we believe can support its valuations,” Motilal lastly added.

GAIL posted Revenue from Operations of Rs. 1,01,580 crores for the nine months ended 31st December 2024 as compared to Rs. 98,304 crores in the corresponding period of the financial year 2023-24. Its Profit after Tax (PAT) is up by 39% to Rs. 9,263 crores as compared to Rs. 6,660 crores in the corresponding period of the previous year.

On a quarterly basis, in Q3FY25, GAIL’s revenue surged by 6% to Rs. 34,958 crores as compared to Rs. 32,931 crores in Q2 FY25. PAT increased by 45% to Rs. 3,867 crores in Q3 FY25 as against Rs. 2,672 crores in the previous quarter.

GAIL Interim Dividend:

GAIL has announced an interim dividend of Rs 6.50 per equity share (face value of Rs 10 each) amounting to Rs 4,273.81 crore. The record date to determine eligible shareholders for the upcoming dividend is fixed on Friday, 07th February, 2025.

Earlier, in February last year, GAIL delivered a Rs 5.50 per share dividend. Notably, GAIL is among the leading PSU stocks that pay hefty dividends. As per Trendlyne data, GAIL has paid up to 47 dividends since September 2001. GAIL is also among the highest bonus issue distributors to its investors.

Also, it needs to be noted that the natural gas producer has a long track record of rewarding bonus shares. The first time, GAIL turned ex-bonus was on October 6, 2008, for its bonus issue in the ratio of 1:2. After nearly a decade, GAIL rewarded two back-to-back bonus shares of 1:3 each in March 2017 and March 2018. Later on, the company also paid bonus shares in the ratio of 1:1 in July 2019. The latest bonus issue is of 1:2 which was in September 2022.

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Original news source Credit: www.goodreturns.in

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