Analysts are divided over GAIL Ltd shares, as one of the brokerages projected gains of up to 16% while another sees a 21% decline in the bear case scenario.
Shares of gas utility GAIL rose by around 2% on Tuesday, January 30, to hit a 52-week high ₹177 apiece amid divided opinion by analysts.
Painting a bullish picture, global brokerage HSBC assigned a ‘buy’ rating on the stock and upgraded the target price to ₹200 per share. The target price implies a potential upside of 16% in the next 12 months.
HSBC in a report said that GAIL's third-quarter earnings have beaten consensus and demonstrate demand momentum. Lower gas prices and new gas marketing contracts are set to drive higher transmission utilisation, HSBC noted.
Keeping a 'neutral' call on GAIL, JP Morgan upgraded its target price to ₹170 per share, marginally down from Monday’s close. The brokerage mentioned that the surprise Q3 numbers were driven by profitability in the petrochemical and LPG segments.
The gas company beat the full-year guidance of gas trading business EBITDA within nine months, it noted. GAIL has largely reversed a collapse in quarterly profits that it suffered last year and it will drive the re-rating of the stock, JP Morgan said.
However, two other analysts gave bearish calls on the gas utility.
Jefferies assigned an 'underperform' call with a target price of ₹150 per share, implying potential loss of 21% in the next 12 months. The brokerage mentioned that GAIL missed EBITDA estimates due to lower volume in transmission and trading. The Petchem segment turned profitable on operational leverage & cheap feedstock, it clarified.
“GAIL shares trade at more + 2SD over LT Fwd EBITDA.” it said, adding that it makes risk reward unfavourable.
Nuvama maintained a 'hold' rating on GAIL while raising its EBITDA estimate for FY25/26 period by 14%/25% respectively on improvement in gas trading and petchem profits.
The brokerage mentioned that GAIL is a diversified play on India’s gas consumption and low utilisation of pipelines and weak petchem stay key challenges.
“We raise FY25E/26E EBITDA by 14%/25%,” the brokerage said.
GAIL shares were trading 1.75% higher at ₹174.70 apiece on BSE at 10.27am.
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