GAIL India’s Q4 EBITDA was 11% below our estimate due to misses in petrochemical and LPG segments though management indicated that some of the higher expense in petchem was on account of stabilization of new capacity and is likely to be one-off. Earnings contribution from subsidiaries declined y-o-y in FY16. While we expect significant improvement in earnings over FY17 and FY18, most of this is reflected into stock price and risk-reward is fairly balanced in our view.
GAIL’s Q4 EBITDA was 11% below our estimate mainly due to misses in petrochemical and LPG segments.
Management indicated that there were some one-off higher expenses in petrochemicals on account of stabilization of the new capacity at Pata but did not quantify the impact.
Natural gas transmission and trading volumes declined q-o-q likely due to shutdowns and closures in many of ONGC’s fields.
Net profit though was in line with our estimate due to tax write-backs in the quarter.
The company also announced a final dividend of Rs 3/share in addition to Rs 2.5/share interim dividend announced earlier.
