5 Bonus Issues, Rs 9.50/Share Dividend: PSU Gas Stock Hits New High, Buy For TP Rs 254: Morgan

Leading brokerage firm Morgan Stanley has maintained "overweight" rating on large cap PSU operating in gas & petroleum sector, GAIL (India) Ltd shares and assigned target price of Rs 254 apiece. Current market price of GAIL share on BSE is Rs 197.70 per share with intraday gain of 3.67%. If you buy GAIL shares now at current market price of Rs 197.70 per share, you can fetch potential upside of 28.48%. This is the highest price target on GAIL shares till now. GAIL is in a sweet spot right now after investment of $7 billion in the pipeline infrastructure in the last 10 years and $1 billion in chemicals and the analyst expects the company to benefit from India's latest growth norm in energy and infrastructure demand, according to April 7 report.

GAIL (India) Ltd Share Performance: The 52-week high price of GAIL shares on BSE is Rs 198.35 per share and 52-week low price is Rs 102.95 per share, respectively. The company has a market capitalisation of Rs 1,30,219.85 crore. The PE of GAIL is 17.26 and the EPS (TTM) is 4.32. GAIL shares offered multibagger returns to shareholders. In last 6-months, GAIL shares zoomed 59%, gave return of 88% in last 1-year, and offered return of 83% in last 2-years. In last 3-years, GAIL stock surged 114%. GAIL shares hit fresh 52-week high and witnessed spurt in volume by more than 1.02 times.

Morgan Stanley On GAIL: According to Morgan, "We see Ebitda doubling and a 13% earnings CAGR in the next three years. Seven stars across divisions are well aligned.We expect GAIL's ROCE to reach upwards of 13% from FY25 after remaining below 10% in the past three years."

The analyst further listed positives aspects for GAIL such as increased power and industrial demand as gas prices are more economical vs. oil. Chemical margins come from higher PE prices and lower gas costs, Tariff hikes on pipelines to recover past higher gas costs, and its focus more on capital returns.

The brokerage firm highlighted the key risk too. "A bigger increase in gas demand than we anticipate as global power demand rises for AI/GenAI," said the brokerage firm. It might slow down the deflation in LNG prices and ultimately lead to a slower pickup in India's gas demand, according to the report.

GAIL Q3 Results: PSU large cap GAIL on January 29, 2024 declared a growth of 18% in its quarterly profit as liquefied natural gas (LNG) prices softened from 2023. Its standalone profit for the quarter ended December 31, 2024 declared at Rs 2,842.62 crore as against Rs 2,404.89 crore in the similar quarter of last year. State-owned GAIL's revenue from operations rallied approximately 8% to Rs 34,253.52 crore as against Rs 31,822.62 crore in Q2. GAIL's EBITDA came at Rs 3,822 crore and margins improved 180 basis points to 11%.

GAIL Bonus Shares History: GAIL (India) Ltd offered shareholders 5 bonuses since October 6, 2008. GAIL's last bonus issue was declared in the proportion of 1:2 with it traded ex-bonus on September 6, 2022. In 2019, it announced bonus issue in 1:1 ratio, in 1:3 ratio in 2018, again in 1:3 ratio in 2017, and in 1:2 ratio in 2008.
GAIL Dividend History: GAIL (India) Ltd. announced 47 dividends since September 3, 2001. In the last 12 months, GAIL declared an equity dividend of Rs 9.50 per share. If current share price of Rs 197.70 is taken into consideration, GAIL offers a dividend yield of 2.78%.

About GAIL (India) Ltd: It was incorporated in August 1984 as a Central Public Sector Undertaking (PSU) under the Ministry of Petroleum & Natural Gas (MoP&NG). The company was initially given the responsibility of construction, operation & maintenance of the Hazira - Vijaypur -Jagdishpur (HVJ) pipeline Project. It was one of the largest cross-country natural gas pipeline projects in the world. Originally this 1800 Km long pipeline was built at a cost of Rs 1700 Crores and it laid the foundation for development of market for natural Gas in India. Government approved grant of Maharatna status to Gas Authority of India Ltd. (GAIL). This decision was communicated on 1st February, 2013.

Disclaimer:

The stock has been picked from the brokerage report of Morgan Stanley. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.