GAIL (India)
According to the brokerage, the company's Q4 revenue was INR 231 billion (+92 per cent year over year, +4% quarter over quarter). The trading margin was INR 2,088/tscm (+3 per cent QoQ) and the marketing volume was 95mmscmd (+4% YoY, -2 per cent QoQ). The operating profit was INR 18 billion (-1 per cent QoQ). The brokerage has said the company’s Q4 revenue was reported at INR 25bn (+13% YoY, +4% QoQ), with sales volume at 216kT, (-8% YoY, flat QoQ). The overall revenue was up YoY despite decline in volumes due to improvement in realisation, which remains healthy at INR 116/kg (+22% YoY, +5% QoQ). The operating profit of the segment was at INR 5bn on account of improved price realisation.
“Our BUY recommendation on GAIL with a target price of INR 195 is based on 8% CAGR expansion in gas transmission volume over FY22-24E to 131mmscmd on the back of (1) increase in domestic gas production, (2) increase in demand of RLNG, and (3) completion of major pipelines in eastern and southern India. Q4FY22 EBITDA at INR 37.1bn came broadly in line while APAT at INR 26.8bn was 4% below estimates, owing to higher depreciation and lower other income," HDFC Securities has said in a report. The brokerage has reduced FY24 EPS by 8.8% to INR 21.8/sh to factor in lower transmission volumes, higher other expenses and higher crude oil and gas prices, delivering a revised target price of INR 195/share.
“Our SOTP, at INR 195/sh, is based on 7x Mar-24E EV/e for the stable natural gas, LPG transmission, and gas marketing business, 5x EV/e for the cyclical petchem and LPG/LHC business, INR 51 for investments. The stock is currently trading at 6.8x FY24E EPS," further added HDFC Securities.
The Board of Directors recommended a final dividend of ₹1.00 per equity share with a face value of ₹10 for FY 2021-22, subject to approval by the Company's members, at its meeting held on May 27, 2022. GAIL shares last traded at ₹149.20 on Thursday, an increase of 0.13 per cent from the previous closing of ₹149. As GAIL India has announced an equity dividend of 100.00 per cent, or ₹10 per share, for the fiscal year ending March 2022, this amounts to a dividend yield of 6.7 per cent at the current share price of ₹149.15.
ONGC
As per HDFC Securities, the company’s revenue for Q4FY22 was broadly in line, at INR 345bn (+63% YoY, +21% QoQ). EBITDA stood at INR 186bn (+84% YoY, +16% QoQ, HSIE INR 198bn) due to higher opex on account of higher write offs in Q4. APAT, at INR 89bn (+32% YoY, HSIE INR 116bn), was impacted by higher opex and depreciation, partially offset by higher other income.
For the company’s standalone operational performance, the brokerage has said Q4 crude oil realisation was USD 97/bbl (+63% YoY, +25% QoQ), while gas realisation 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 INR 220, based on (1) increase in crude price realisation and (2) improvement in domestic gas price realisation. Average FY22 oil price realisation improved to USD 77/bbl vs USD 43/bbl in FY21, given the expected global economic rebound, post COVID. While Q4FY22 revenue was broadly in line, EBITDA/APAT were 6/24% below our estimates, owing to higher employee cost, other expenses, and exploration costs," HDFC Securities has said in its research report.
The brokerage has slashed its FY23/24 estimates by 6.2/8.4% to INR 60.7/48, to factor in higher expenses and lower net oil price realisation due to under-recovery overhang, delivering a revised target price of INR 220/sh. “We value ONGC’s standalone business + OVL at 4.5x FY24 EPS at INR 189 and investments at INR 31. The stock is currently trading at 3x FY24E EPS," further added the brokerage.
The company's Board of Directors has recommended a final dividend of ₹3.25 per equity share of ₹5 each, or 65 per cent, for the financial year 2021-22, subject to the members' approval at the next Annual General Meeting. With a total payout of Rs. 13,209 crore, the total dividend for FY'22 would be 210 per cent (Rs. 10.50 per share of face value ₹5 apiece). This includes a 145 per cent interim dividend (Rs. 7.25 per share) already paid during the year, and a 65 per cent final dividend (Rs. 3.25 per share) recommended by the Board, according to the company.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
