GAIL share price in focus ahead of Q3 result; should you buy the stock for short term?

Stock market today: GAIL share price traded with mild gains in morning trade on the BSE on Monday, January 29, ahead of its December quarter earnings. GAIL share price opened nearly 2 per cent higher at ₹168.15 against the previous close of ₹165.40 but soon pared most gains. Around 9:40 am, the stock traded 0.88 per cent up at ₹166.85.

GAIL (India) will report its Q3FY24 earnings on Monday, January 29.

GAIL share price has clocked healthy gains in the last three months, jumping over 38 per cent, significantly outperforming the equity benchmark Sensex. The Sensex has gained over 10 per cent in the same period.

On a monthly basis, GAIL share price is up nearly 3 per cent in January so far, after registering a strong gain of over 23 per cent in December and over 10 per cent in November.

GAIL Q3 result preview

Experts point out that GAIL’s transmission volumes increased to 118.3 million metric standard cubic meters per day (mmscmd) in the first half of the current financial year (H1FY24) led by an uptick in demand from new fertilizer units, city gas distribution (CGD) and refineries, and normalcy in gas supply from Gazprom Marketing and Trading Singapore Pte Limited (GMTS).

(Exciting news! Mint is now on WhatsApp Channels. Subscribe today and stay updated with the latest financial insights! Click here!)

Prathamesh Masdekar, a research analyst at StoxBox said though GAIL’s gas volumes are likely to improve along with growth in its petrochemical segment, there could be a marginal contraction in the company's gas marketing margins in Q3FY24.

Also Read: Vodafone Idea share price jumps ahead of Q3 results today. Buy or sell?

However, Masdekar added that an improvement in LPG realizations for the third quarter will help in reducing the impact on the EBITDA levels of the gas company.

"With improvement seen in GAIL’s capacity utilization and increase in its pipeline infrastructure, we expect the gas company to have a healthy top-line in Q3FY24," said Masdekar.

Brokerage firm Kotak Institutional Equities expects GAIL's EBITDA to decline nearly 9 per cent quarter-on-quarter (QoQ), mainly on lower marketing profits.

"We expect QoQ improvement for transmission (lower IC costs), LPG/LHC (higher prices) and petchem (lower gas cost, partly offset by lower realisation). Though LPG/LHC should return to profits, petchem will likely still be in EBIT loss (or only marginal positive EBIT)," said Kotak.

"We assume (1) a nearly 1 per cent QoQ increase in gas transmission volumes to 122 mmscmd and gas transmission tariff to Rs64/mmbtu, (2) petchem production to recover further (18 per cent QoQ), but realization would likely decline nearly 4 per cent QoQ and (3) a sharp 36 per cent QoQ recovery in LPG/LHC realizations to ₹58 per kg on higher international LPG prices," said Kotak.

Also Read: SBI Card share price plunges over 5% as Q3 result misses estimates; should you buy, sell or hold the stock?

GAIL share price target

Some technical analysts suggest buying GAIL share for the short term.

Ganesh Dongre, Senior Manager of Technical Research at the brokerage firm Anand Rathi underscored that the stock showed a bullish reversal pattern on the short-term charts so, technically retrenchment could be possible till ₹172.

Dongre believes holding the support level of ₹160, this stock can bounce toward the ₹172 level in the short term.

"Traders can go long on the stock with a stop loss of ₹160 for the target price of ₹172," said GAIL.

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.