GAIL (India) Q3FY21 EBITDA was largely in line while PAT was above our forecast led by higher than expected other income. Stellar performance by petrochemicals benefiting from highest-ever utilisation level at 114% was largely offset by third consecutive quarterly EBITDA loss at trading business. Gas transmission business volume remained flattish YoY (+4% QoQ) at 110.3 mmscmd while LHC business saw a marginal dip at its EBITDA level.

GAIL's management expect 5-7% rise in transmission volume in coming few years led by commissioning of new gas pipeline and demand from new fertiliser units in UP along with at least 110% utilisation level at its Petchem plant. Further, it expects stronger Q4FY21 owing to additional profit contribution from trading business which is likely to benefit from surge in spot LNG prices in Jan'21.

IDBI Capital maintains 'Buy' rating on GAIL (India) with revised target price to Rs 155 from earlier Rs 109.

Commenting on the result review, the broking firm said, "We raise FY21/22/23 EBITDA by 5.7%/2.5%/3.1% in order to factor in stronger petchem business. Monetization of pipeline, higher volume and stronger LHC prices are few tailwinds for the company. We raise its TP to Rs 155 from earlier Rs 109. Maintain Buy."  

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