Motilal Oswal says GAIL's valuations are compelling. FY27 dividend yield is 4.3%
Motilal Oswal says GAIL's valuations are compelling. FY27 dividend yield is 4.3%
Valuations are compelling; FY27 dividend yield at 4.3%: GAIL share price has corrected 30% over the past five-and-a-half months and now trades at 8.1x SA 1yr fwd. P/E (excl. listed investments). We foresee limited downside from the current level amid robust transmission volume growth, a steady marketing outlook and a diversified petchem portfolio. FY27E dividend yield of 4.3% is ~56% above the 10Y median dividend yield and looks attractive. We cut our EBITDA/PAT estimates by 7% to 11% for FY26/FY27, as we 1) lower our petchem margins amid sequentially weak spreads and soft outlook, 2) build in 3-6-month delays in the commissioning of upcoming petchem facilities, 3) slightly moderate our FY26/FY27 transmission volume assumptions to 140/150mmcmd (vs. 144/154mmscmd earlier), 4) marginally lower our marketing segment EBITDA. We now value gas transmission, marketing and petchem segments at EV/EBITDA of 8x/5x/5.5x. Accordingly, we reiterate BUY on GAIL with our SoTP-based TP of INR195.