INDIA’S largest natural gas transporter posted a substantially better result for the quarter ended September 2008 helped by higher operating margins and flat subsidy burden. Gail net profit during the second quarter spurted 79% to Rs 1,023 crore while its net sales grew 36% to Rs 6,173 crore.
Gail’s operating margin in the quarter jumped 450 basis points to 23.9% mainly due to a sharp fall in its other expenditure. The company had booked Rs 257 crore in the corresponding quarter of the previous year as write-off on an exploration well going dry inflating the other expenditure. A fall in interest and depreciation costs and easing of effective rate of tax to 31.9% helped the company’s bottomline post a sharp growth. Liquid hydrocarbons proved to be the best performing segment for Gail as its subsidy burden inched up only marginally to Rs 401 crore. The profit of this segment jumped 157% to Rs 575 crore making it the largest contributor to Gail’s bottomline. Natural gas trading business as well reported a robust performance with 58% profit growth to Rs 111 crore. The profits from transmission of natural gas and LPG as well as the petrochemicals business remained flat.
Despite a weak market Gail shares ended 0.5% higher at Rs 224.65 on Thursday ahead of its results. The scrip has lost 19% against a 28% fall in Sensex over last one month.
Going forward, Gail is likely to emerge as the key beneficiary of improving natural gas availability in India. The company is laying up pipelines to double its transmission capacity in next three years. Additional natural gas from RIL’s KG basin and Petronet LNG’s expanded capacity is expected to start accruing from the first quarter of 2009 onwards.
Gail’s operating margin in the quarter jumped 450 basis points to 23.9% mainly due to a sharp fall in its other expenditure. The company had booked Rs 257 crore in the corresponding quarter of the previous year as write-off on an exploration well going dry inflating the other expenditure. A fall in interest and depreciation costs and easing of effective rate of tax to 31.9% helped the company’s bottomline post a sharp growth. Liquid hydrocarbons proved to be the best performing segment for Gail as its subsidy burden inched up only marginally to Rs 401 crore. The profit of this segment jumped 157% to Rs 575 crore making it the largest contributor to Gail’s bottomline. Natural gas trading business as well reported a robust performance with 58% profit growth to Rs 111 crore. The profits from transmission of natural gas and LPG as well as the petrochemicals business remained flat.
Despite a weak market Gail shares ended 0.5% higher at Rs 224.65 on Thursday ahead of its results. The scrip has lost 19% against a 28% fall in Sensex over last one month.
Going forward, Gail is likely to emerge as the key beneficiary of improving natural gas availability in India. The company is laying up pipelines to double its transmission capacity in next three years. Additional natural gas from RIL’s KG basin and Petronet LNG’s expanded capacity is expected to start accruing from the first quarter of 2009 onwards.
No comments:
Post a Comment