Gayle (India)
According to the brokerage, the company’s Q4 revenue was INR 231 billion (+92 percent year-on-year, +4% quarter-on-quarter). Trading margin was INR 2,088/tscm (+3 percent QoQ) and marketing volume was 95mmscmd (+4% YoY, -2 percent QoQ). Operating profit was INR 18 billion (-1 per cent QoQ). The brokerage said that the company’s Q4 revenue was reported at INR 25bn (+13% YoY, +4% QoQ) with sales volume of 216kT, (-8% YoY, flat QoQ). Overall revenue grew year-on-year, despite volume declines on the back of improvement in realizations, which remained healthy at 116/kg (+22% YoY, +5% QoQ). Operating profit of the segment was INR 5bn on account of better value realization.
“Our buy recommendation on GAIL with a target price of Rs 195 is based on 8% CAGR expansion in gas transmission volumes in FY 2012-24E based on (1) increase in domestic gas production, (2) increase in demand. RLNG, and (3) completion of major pipelines in eastern and southern India. Q4FY22 EBITDA came in broadly in line with the APAT estimate at INR 37.1bn, while 4% lower than the APAT estimate at INR 26.8bn, owing to higher depreciation and lower other earnings,” HDFC Securities said in a report. FY24 EPS at 8.8% Reduced to INR 21.8. Providing a revised target price of INR 195/sh, to factor in lower transmission volumes, higher other expenses and higher crude oil and gas prices.
“Our SOTP, at INR 195/sh, is based on 7x Mar-24E EV/e for Fixed Natural Gas, LPG Transmission, and Gas Marketing business, 5x EV/e for Cyclic Petchem and LPG/LHC business, INR 51 . for investment. The stock is currently trading at 6.8x FY24E EPS,” further added HDFC Securities.
Board of Directors recommends final dividend 1.00 per equity share with face value 10 for the financial year 2021-22, subject to approval by the members of the company in its meeting held on 27th May, 2022. GAIL shares were last traded 149.20 on Thursday, an increase of 0.13 percent from the previous close of 149. As declared by GAIL India, equity dividend of 100.00 per cent, or 10 per share, for the financial year ending March 2022, this equates to a dividend yield of 6.7 per cent at the current share price. 149.15.
ONGC
According to HDFC Securities, the company’s revenue for Q4FY22 was roughly in line with INR 345bn (+63% YoY, +21% QoQ). EBITDA stood at INR 186bn (+84% YoY, +16% QoQ, HSIE INR 198bn) in Q4 due to higher opex due to higher write offs. APAT, at INR 89bn (+32% YoY, HSIE INR 116bn), was impacted by higher OPEX and depreciation, partially offset by higher other income.
As for the company’s standalone operating performance, the brokerage said that Q4 crude oil realization was USD 97/bbl (+63% YoY, +25% QoQ), while gas realization was USD 2.9/mmbtu (+48% YoY, flat QoQ). Oil sales volume was 4.4mmt (-1%YoY, +1% QoQ). Gas sales volume was 4.1bcm (-7% YoY, -6% QoQ).
“We maintain our buy recommendation on ONGC with a target price of Rs 220, based on (1) an increase in crude oil price and (2) improvement in domestic gas price realization. Oil price correction to USD 77/bbl versus USD 43/bbl in 2012, given the expected global economic rebound, post-COVID. While Q4FY22 revenues were broadly in line, EBITDA /APAT was 6/24% lower than our estimate, due to higher employee cost, other expenses and exploration cost,” HDFC Securities said in its research report.
The brokerage has cut its FY23/24 estimates by 6.2/8.4% to Rs 60.7/48 on account of lower-recovery overhang on account of higher expenses and lower net oil price realization, revised target price of INR 220/sh provides. The brokerage further said, “We invest in ONGC’s Standalone Business + OVL at 4.5x FY24 EPS at INR 189 and INR 31. The stock is currently trading at 3x FY24E EPS.”
The Board of Directors of the company has recommended the final dividend of 3.25 per equity share 5 each, or 65 per cent, for the financial year 2021-22, subject to the approval of the members at the next annual general meeting. With a total payment of Rs. 13,209 crores, the total dividend for FY’22 will be 210 per cent (Rs 10.50 per share of face value) 5 copy). Of this, 145 per cent interim dividend (Rs 7.25 per share) has already been paid during the year, and 65 per cent final dividend (Rs 3.25 per share) as recommended by the board of the company.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.