Moneycontrol Bureau
Brokerages are concerned about GAIL’s petrochemical business and fear a downgrade. The company's fourth quarter net profit declined16 percent sequentially to Rs 510.75 crore, impacted by higher other expenses and loss at petrochemicals division. Total income from operations slipped 4.7 percent to Rs 14,270.62 crore during January-March quarter compared to Rs 14,969.41 crore in December quarter.
CLSA has a sell rating on the stock with a target of Rs 360 per share and slashed earnings per share (EPS) by 8-11 percent factoring in lower crude and lower gas trading profits. Expecting a downgrade, it says GAIL's gas transmission volumes may remain subdued in next two years. It feels long term LNG contract with Qatar remains a big risk.
Bank of America Merill Lynch maintains an underperfom rating with a target of Rs 327 per share. It feels earnings growth in FY16-17 is likely to be just 4-6 percent despite a low base.
Continuing with a cautious view, Antique has cut FY16 EPS by 8 percent due to adverse petchem outlook but raised it for FY17 by 6 percent on lower domestic gas prices. However, it has upgraded the stock to hold from sell with a revised target price of Rs 390 per share considering the price correction over the last five-to-six months.
At 11:28 hrs the stock was at Rs 379.50, down Rs 1.65, or 0.43 percent on the BSE.
Posted by Nasrin Sultana
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