Synopsis: GAIL India shares soared over 5% to a 52-week high after the company reported strong Q1 FY25 results, exceeding market expectations. With a 77.5% YoY rise in net profit and positive growth in gas transmission volumes, experts recommend considering the stock for purchase.
GAIL India, the nation's largest gas distributor, witnessed a significant surge in its share price, jumping over 5% to hit a 52-week high in early trade on Wednesday. This upward momentum came after the company posted robust Q1 FY25 results, surpassing street estimates.
Financial Performance
GAIL India's consolidated net profit for the first quarter of FY25 surged by 77.5% year-on-year (YoY) to Rs. 3,183.35 crore, compared to Rs. 1,792.99 crore in the corresponding quarter of the previous year. This impressive growth was driven by increased gas transmission volumes, higher domestic natural gas marketing volume, and improved marketing margins for natural gas.
Sequentially, the net profit grew by 28.6%, indicating strong operational performance. Revenue from operations also saw a marginal increase, rising to Rs. 34,821.89 crore from Rs. 32,848.78 crore YoY.
Segment Performance
The company's natural gas transmission segment exhibited significant growth, with Earnings Before Interest and Taxes (EBIT) for the June quarter rising by 47.3% to Rs. 1,446.87 crore from Rs. 982.45 crore in the March quarter. On a year-on-year basis, this segment's EBIT grew by 40%.
In the natural gas marketing segment, EBIT jumped to Rs. 2,036.13 crore from Rs. 1,507.65 crore in the previous quarter. However, the petrochemicals segment reported an EBIT loss of Rs. 49.31 crore, compared to an EBIT of Rs. 533.41 crore in the previous quarter and a loss of Rs. 301.75 crore YoY.
Capex and Future Outlook
GAIL India incurred a capital expenditure of approximately Rs. 1,659 crore during the current quarter, primarily allocated to pipelines, petrochemicals, and equity investments in joint ventures. This expenditure represents about 21% of the company's annual capex target of Rs. 8,044 crore.
Market Response and Analyst Recommendations
Following the Q1 results announcement, GAIL shares rallied by as much as 5.43% to Rs. 246.35 per share on the BSE. The stock has risen more than 10% in the past month, over 17% in three months, and has delivered an impressive 51% year-to-date (YTD) return. Over the past year, GAIL shares have more than doubled, providing a return of over 105%.
Foreign brokerage firms Citi and UBS both maintain a 'Buy' rating on GAIL India shares, with a target price of Rs. 250 apiece. This bullish outlook is based on the company's strong financial performance and positive future prospects.
Conclusion
GAIL India's strong Q1 performance and optimistic growth outlook have led to a substantial rise in its share price. With significant gains in key segments and positive market sentiment, the stock presents a compelling investment opportunity. However, potential investors should conduct thorough research and consider market conditions before making investment decisions.
Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. Investors are advised to perform their own research and consult with a certified financial advisor before making any investment decisions.
