Motilal Oswal Financial Services

13 August 2020

1QFY21 Results Update | Sector: Oil & Gas

GAIL

Buy

Estimate change

TP change

Rating change

Motilal Oswal values your support in

the Asiamoney Brokers Poll 2020 for

India Research, Sales and Trading

team. We

request your ballot.

CMP: INR98



TP: INR150 (+54%)

Pain in gas trading hurts profitability; Should abate in FY22E

GAIL reported lower-than-estimated EBITDA, led by poor performance in gas

trading, petchem and LPG HC. With revival in crude oil prices, we believe these

segments would remain lucrative for the company in the coming quarter.

Currently, GAIL is operating at ~95% of FY20 (trading and transmission) volumes

and the company expects it to normalize to pre-COVID levels in another two

months. Currently, volumes stand at 109.5mmscmd/87.2mmscmd for

transmission/trading. Also, demand from fertilizer/power is stabilizing again.

However, some delay is expected in the start-up of plants (Matix Fertilizer,

Ramagundum Fertilizer and Mangalore Fertilizer), owing to COVID led reasons.

Currently, ~10mmscmd of gas is sold outside India (of the total contracted

volumes of 46-47mmcscmd). From Jun’21, the entire volume would be sold in

India with commissioning of the 4 fertilizer plants (on JHDBPL) and should touch

full capacity of 16mmscmd as refineries are connected (in 2021 with Phase-II).

This together would eventually de-risk the US HH contracts and make them

profitable in India.

Along with de-risking of US HH contracts, the company has strong tailwinds like

boost in transmission volumes from increased domestic gas production, upcoming

LNG terminals and NGT’s increasing impetus on curbing air pollution.

We continue to believe that the above guidance would aid GAIL clock strong

performance. Maintain Buy rating with TP of INR150/share.

Also, trading at ~50% discount to long-term 1-year forward P/E of 13.2x, GAIL

offers an excellent investment opportunity.



Bl oomberg

Equi ty Sha res (m)

M.Ca p.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel . Per (%)

12M Avg Va l (INR M)

GAIL IN

4,510

439.7 / 5.9

148 / 66

-8/-18/-26

1547



Financials & Valuations (INR b)

Y/E March

2020 2021E 2022E

Sa l es

718.8 593.9 735.1

EBITDA

83.7

80.2 103.5

Adj. PAT

74.2

53.3

69.2

Adj. EPS (INR)

16.5

11.8

15.3

EPS Gr. (%)

17.3 -28.1

29.8

BV/Sh.(INR)

105.9 113.5 123.5

Ratios

Net D:E

0.1

RoE (%)

15.0

11.7

13.9

RoCE (%)

12.7

9.8

11.6

Pa yout (%)

52.5

35.0

Valuations

P/E (x)

5.9

8.2

6.3

P/BV (x)

0.9

0.8

EV/EBITDA (x)

4.7

5.2

4.8

Di v. Yi el d (%)

6.6

3.5

4.6

FCF Yi el d (%)

4.5

-1.1

1.5



Huge miss on EBITDA primarily due to trading losses



GAIL reported EBITDA miss of 67% at INR6.2b (-72% YoY), primarily due to

poor performance in the gas trading segment

Reported PAT stood at INR2.6b (-84% YoY).

Segmental highlights

Gas transmission:

EBITDA was down 11% YoY to INR9.5b with transmission

volumes at 90.2mmscmd (-14% YoY and -17% QoQ), implying utilization at ~45%

(v/s ~53% in 4QFY20). Gas transmission EBIT was down 17% YoY to INR7.2b.



Work on the Kochi-Mangalore pipeline is on in full swing and should be

completed shortly. Other pipelines in East-India should get completed by

FY22-23E.

Shareholding pattern (%)

As On

Promoter

DII

FII

Others

Jun-20 Mar-20 Jun-19

51.8

52.2

27.2

26.5

22.8

16.2

16.8

21.1

4.9

5.0

3.9

Gas trading:

EBIT reported record loss of INR5.5b (v/s gain of INR8.5b in

1QFY20). Inventory loss on trading was ~INR2.5b in 1QFY21. Gas trading

volumes stood at 81.6mmscmd (-15% YoY and -17% QoQ).



In 1QFY21, domestic gas sales fell by 4.4mmscmd and US LNG sales were

impacted by ~5mmscmd (v/s in 4QFY20). CGD sector consumption fell to

~6mmscmd in 1QFY21 (v/s average consumption of 14-15msmcmd).



Also, the company had to offer various discounts to customers owing to

subdued prices in the spot market. GAIL received 20 LNG cargoes in 1QFY21

(v/s 23 in the last quarter).



Around 90% of the cargoes for CY21 have been hedged/ sold.

FII Includes depository receipts

Swarnendu Bhushan- Research Analyst

(Swarnendu.Bhushan@MotilalOswal.com)

Sarfraz Bhimani - Research Analyst

(Sarfraz.Bhimani@MotilalOswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

GAIL

Petchem:

EBITDA was down 63% YoY, implying a loss of INR0.4b (v/s gain of

INR1.9b in 4QFY20), with sales volumes at 183tmt (+35% YoY and +5% QoQ).

Production for the quarter stood at ~134tmt, implying utilization of ~66% (v/s

~103% in 4QFY20). Petchem EBIT loss came in at INR1.5b (v/s gain of INR0.7b in

4QFY20).



Non availability of transportation due to the lockdown led to inventory build-up,

and hence, the company had to reduce utilization at PATA-I/II plants. However,

the plants restarted from 18

Apr’20 and full utilization was achieved in May’20,

although total production loss came in at ~65tmt. The Petchem plant is now

operating at full capacity.



Realization was also 18% lower YoY to INR67/kg (-5% QoQ). This was led by

continued pressure on Petchem margins owing to the global supply glut and lack

of demand led by COVID-19 and the economic slowdown.

LPG transmission:

EBITDA was up 26% YoY to INR1b (-13% QoQ), with volumes at

963tmt (+16% YoY and -7% QoQ), implying 97% utilization (v/s 109% in 4QFY20).

Liquid Hydrocarbon business:

EBITDA was down 46% YoY to INR2.9b, with

volumes at 269tmt (-10% YoY and -11% QoQ), implying utilization of ~76% (v/s 85%

in the last quarter).



Propane, ethane and naphtha products were impacted, while domestic LPG

sales were strong during the quarter.



Average realizations declined ~INR10,400/mt, which impacted profitability.

Capex highlights:

Capex guidance for FY21 stands at INR45-50b (spent INR4b in

1QFY21) and for FY22E, at INR80-90b. Urja-Ganga pipeline work is on track and

capex spent till date is ~INR98b (of the total INR136b). The company has received

capital grant of INR36b out of total INR51b.

Valuation and view



With ever-increasing gas demand in the country, transmission pipelines would

play a critical role in connecting both imported and domestically produced gas

with consumers. This should encourage development of new pipeline

infrastructure in the country.

We had highlighted in

our earlier note

how concerns pertaining to US LNG

would subside with operations restarting at new fertilizer plants. Also, most

potential users in the KG Basin are power plants, which may be unable to

procure the high-cost KG Basin gas. Thus, even 70% routing of the KG Basin gas

to the West coast could boost GAIL’s transmission volumes by 29%.

In line with the huge miss during 1QFY21, we have revised down our FY21 EPS

by 8%, keeping FY22E unchanged. We believe pain in the gas trading business

for GAIL should abate in FY22E (as all the cargoes are sold in India). We maintain

Buy

with TP of INR150/share.

Also, the stock is trading at 6.3x FY22E EPS of INR15.3 and 4.8x FY22E

EV/EBITDA, offering an excellent investment opportunity.

13 Augus t 2020

GAIL

Quarterly Performance

Y/E March

FY20

FY21

FY20 FY21E

FY21 Var.

1QE vs est

Net Sales

1,83,115 1,80,411 1,77,688 1,77,550 1,20,875 1,45,290 1,54,611 1,73,113 7,18,764 5,93,889 1,32,150 -9%

Cha nge (%)

5.9

-6.4

-10.2

-5.4

-34.0

-19.5

-13.0

-2.5

-4.3

-17.4

-27.8

EBITDA

22,590 15,627 20,724 24,754

6,226 21,576 25,154 27,218 83,694 80,174 18,987 -67%

% of Net Sa les

12.3

8.7

11.7

13.9

5.2

14.9

16.3

15.7

11.6

13.5

14.4

Depreciation

4,057 4,398

4,890 5,016

4,583 4,583 4,583

4,957 18,360 18,706 4,655

-2%

Interest

239

275

242

329

495

392

344

315 1,085

1,546

308

61%

Other Income

1,512 4,401

3,124 5,132

2,413 2,580 2,580

3,761 14,168 11,335 2,580

-6%

Extra ordi nary i tem*

0 1,016

PBT

19,805 15,355 18,716 25,557

3,562 19,181 22,807 25,707 79,434 71,257 16,604 -79%

Ta x

6,930 4,713

6,210 -4,625

1,007 4,828 5,740

6,360 13,227 17,935

883

Ra te (%)

35.0

30.7

33.2

-18.1

28.3

25.2

24.7

16.7

25.2

5.3

PAT

12,875 10,643 12,507 30,182

2,555 14,353 17,066 19,347 66,206 53,321 15,721 -84%

Cha nge (%)

2.2

-45.8

-25.6 168.9

-80.2

34.9

36.5

-35.9

9.9

-19.5

22.1

Extra ord.: Ta x Prov. Wri te Back

173 -9,176

0 -9,003

Adj PAT

12,875 10,643 12,334 38,341

2,555 14,353 17,066 19,347 74,193 53,321 15,721 -84%

Cha nge (%)

2.2

-45.8

-25.2 163.6

-80.2

34.9

38.4

-49.5

17.3

-28.1

22.1

Key Assumptions

Ga s Tra ns. volume (mmsmd)

105

109

110

109

107

111

114

108

106

95 -5%

Petchem sales ('000MT)

136

217

211

174

183

190

192

195

738

760

104 75%

E: MOFSL Es ti mates

(INR Million)

Exhibit 1:

Transmission volumes down 14% YoY

Gas trans EBIT (INRb)

Gas - Transmission (mmscmd)

Exhibit 2:

Trading reports EBIT loss

N. Gas trading EBIT (INRb)

Gas trading (mmscmd)

97 96 96 98 97 95 96 98

69 74

88 89

79 81 83 82 78 85

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q

FY16

FY17

FY18

FY19

FY20

FY21

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

FY16

FY17

FY18

FY19

FY20

FY21

Source: MOFSL, Company

Exhibit 3:

Petchem volumes increased to 183kt

Petchem EBIT (INR b)

186

Petchem volumes (KT)

213 217

211

191 183

183

176 166 173

175

174

136 146 131

136

116

110

Exhibit 4:

LPG and Liquid HC realization decreases

Pre subsidy LPG & Liq HC EBIT (INR b)

LPG realization (USD/MT)

84 84

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q

FY16

FY17

FY18

FY19

FY20

FY21

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

FY16

FY17

FY18

FY19

FY20

Source: MOFSL, Company

13 Augus t 2020

GAIL

Exhibit 5:

GAIL — Segment-wise performance details (INR m)

Exchange Rate (INR/USD)

Gas transmission business

Vol umes (mmscmd)

Gros s Revenues

Opex

EBITDA

Depreciation

EBIT

Avera ge tariff (INR/mscm)

Opex (INR/mscm)

EBITDA (INR/mscm)

Depreciation (INR/mscm)

EBIT (INR/mscm)

LPG Transmission Business

Vol umes ('000 MT)

Gros s Revenues

Opex

EBITDA

Depreciation

EBIT

Avera ge tariff (INR/MT)

Opex

EBITDA

Depreciation

EBIT

Gas Trading Business

Vol umes (mmscmd)

Revenues

EBIT

Revenues (INR/mscm)

EBIT (INR/mscm)

Petrochemicals Business

Vol umes ('000 MT)

Gros s Revenues

Opex

EBITDA

Depreciation

EBIT

Rea lization (USD/MT)

Rea lization (INR/kg)

Opex (INR/kg)

EBITDA (INR/kg)

Depreciation (INR/kg)

EBIT (INR/kg)

LPG & Liquid HC Business

Vol umes ('000 MT)

Gros s Revenues

Opex

EBITDA

Depreciation

EBIT

EBIT (Post-Subsidy)

Rea lization (USD/MT)

Rea lization (INR/MT)

Opex (INR/MT)

EBITDA (INR/MT)

Depreciation (INR/MT)

EBIT (INR/MT)

EBIT post Subsidy (INR/MT)

67.0

107

13,115

4,035

9,080

2,052

7,028

1,347

414

932

211

722

901

1,410

610

800

146

654

1,565

677

888

162

726

FY19

70.2

106

15,308

4,498

10,810

1,865

8,945

1,469

462

1,110

191

918

1,015

1,524

734

790

137

653

1,501

723

778

135

643

72.3

108

14,722

4,002

10,720

1,883

8,837

1,486

404

1,082

190

892

1,036

1,540

630

910

144

767

1,486

608

878

139

740

70.6

109

14,642

4,362

10,280

2,551

7,729

1,490

444

1,046

260

787

1,023

1,768

678

1,090

150

941

1,728

662

1,065

146

919

69.6

105

14,797

4,117

10,680

2,085

8,595

1,543

429

1,113

217

896

827

1,346

586

760

144

616

1,627

708

919

175

744

FY20

70.3

109

14,150

3,950

10,200

2,173

8,028

1,601

395

1,020

217

803

999

1,612

652

960

146

814

1,613

652

961

146

815

71.2

110

15,855

3,655

12,200

2,345

9,855

1,562

360

1,202

231

971

1,043

1,688

608

1,080

145

935

1,618

583

1,035

139

896

72.4

FY21

74.5

1QFY21 (%)

YoY

QoQ

-14%

-23%

-11%

13%

-17%

-11%

32%

-3%

16%

14%

-2%

26%

32%

-2%

-16%

-14%

14%

-17%

-18%

-19%

-18%

-13%

-20%

-1%

-2%

-1%

-3%

-7%

-11%

-7%

-13%

-6%

-14%

-4%

-6%

-7%

109

15,542 12,681

3,902 3,151

11,640 9,530

2,720 2,364

8,920 7,167

1,567 1,545

393

384

1,174 1,161

274

288

899

873

1,040

1,719

619

1,100

155

945

1,653

595

1,058

149

909

963

1,536

576

960

145

815

1,594

598

997

151

846

82 -15% -17%

1,40,347 1,56,519 1,61,969 1,54,541 1,54,613 1,50,858 1,46,627 1,47,449 94,437 -39% -36%

5,513 10,448

6,754

5,875

8,505

2,366

4,665

6,026 -5,455 -164% -191%

15,874 17,685 18,339 17,447 17,598 17,315 16,602 16,574 12,718 -28% -23%

624

1,030

765

663

968

272

528

677

-735 -176% -208%

166

16,134

13,004

3,130

1,052

2,078

1,451

310

10,725

5,265

5,460

159

5,301

516

34,598

16,985

17,613

514

17,099

183

17,722

14,972

2,750

1,076

1,674

1,379

338

13,766

5,936

7,830

159

7,671

580

40,727

17,561

23,166

470

22,696

173

15,994

14,614

1,380

1,083

297

1,279

342

15,122

6,632

8,490

158

8,332

612

44,215

19,390

24,825

462

24,363

213

17,190

16,300

890

1,090

-200

1,143

-1

335

11,219

6,699

4,520

359

4,162

474

33,489

19,997

13,493

1,070

12,422

136

11,128

12,298

-1,170

1,100

-2,270

1,176

-9

-17

298

11,457

6,177

5,280

172

5,108

553

38,445

20,727

17,718

578

17,140

217

16,192

15,872

320

1,143

-823

1,061

-4

329

9,605

6,875

2,730

277

2,454

415

29,195

20,898

8,298

840

7,457

211

14,828

13,778

1,050

1,135

-85

987

337

9,736

6,556

3,180

216

2,964

406

28,891

19,455

9,436

642

8,794

174

183

12,174 12,217

10,324 12,647

1,850

-430

1,126 1,114

724 -1,544

966

896

-2

-8

302

269

11,539 7,479

5,999 4,619

5,540 2,860

259

198

5,281 2,662

528

373

38,209 27,803

19,865 17,171

18,344 10,632

856

736

17,488 9,896

35%

10%

-63%

-32%

-24%

-18%

-24%

-73%

-25%

-49%

-10%

-35%

-25%

-46%

15%

-48%

-32%

-28%

-17%

-40%

27%

-42%

23%

-123%

-1%

-313%

-7%

-5%

16%

-122%

-6%

-303%

-11%

-35%

-23%

-48%

-23%

-50%

-29%

-27%

-14%

-42%

-14%

-43%

13 Augus t 2020

GAIL

Story in charts

Exhibit 6:

Transmission a major contributor to EBITDA

NG transmission %

Petrochemicals %

FY15

NG trading %

LPG (pre-subsidy) %

FY19

FY20

LPG transmission %

Exhibit 7:

Gas transmission volumes to grow in FY22E

Gas trans EBIT (INR b)

100

105

Gas trans vol. (mmscmd)

125

108

107

106

-9

FY16

FY17

FY18

FY15

FY16

FY17

FY18

FY19

FY20

FY21E FY22E

Source: Company, MOFSL

Exhibit 8:

LPG transmission segment

LPG trans EBIT (INR b)

3.7

4.0

LPG trans vol. (mmt)

4.7

4.3

3.9

Exhibit 9:

Petchem EBIT to increase

Petchem EBIT (INR b)

673

735

Petchem vol. ('000 MT)

738

760

800

3.1

2.8

3.4

578

441

334

(0)

FY15

FY16

FY17

FY18

FY19

FY20

FY15

(2)

(8)

FY16

FY17

FY18

FY19

FY20

FY21E FY22E

Source: Company, MOFSL

Exhibit 10:

Gas trading volumes to grow in FY22E

Gas trading EBIT (INR b)

Gas trading vol. (mmscmd)

Exhibit 11:

LPG and Liquid HC EBIT to improve in FY22E

LPG & Liq. HC EBIT (INR b)

784

LPG Realization (USD/mmt)

108

468

435

526

549

472

404

451

FY15

FY16

FY17

FY18

FY19

FY20

FY15

FY16

FY17

FY18

FY19

FY20

FY21E FY22E

Source: Company, MOFSL

13 Augus t 2020

GAIL

Exhibit 12:

Return ratios to improve

RoE (%)

RoCE (%)

Exhibit 13:

D/E ratio expected to decline

Net Debt (INRb)

0.34

0.20

0.10

0.09

-57

-2

0.06

-21

0.05

Gross D/E Ratio

FY16

0.05

FY21E

FY15

FY17

FY18

FY19

FY20

FY21E FY22E

FY15

FY16

FY17

FY18

FY19

FY20

Source: Company, MOFSL

Exhibit 14:

1 year forward P/E

P/E (x)

Avg (x)

28.0

Min (x)

+1SD

20.0

12.0

4.0

9.4

13.2

26.1

Max (x)

-1SD

17.0

Exhibit 15:

1 year forward P/B (x)

P/B (x)

Avg (x)

4.0

Min (x)

+1SD

3.0

2.0

1.7

0.7

2.2

1.2

Max (x)

-1SD

3.1

6.7

1.0

0.0

0.8

5.9

Source: Company, MOFSL

13 Augus t 2020

GAIL

Financials and Valuations

Income Statement

Y/E March

Net Sales

Cha nge (%)

EBITDA

% of Net Sa les

Depreciation

Interest

Other Income

EO Items (net)

PBT

Ta x

Ra te (%)

Reported PAT

Adjusted PAT

Cha nge (%)

2015

5,67,420

-0.9

46,962

8.3

9,743

3,613

8,609

629

42,844

12,452

29.1

30,392

29,543

-30.5

2016

5,16,143

-9.0

39,684

7.7

13,131

6,400

11,576

31,728

8,739

27.5

22,989

-24.4

2017

4,80,743

-6.9

63,152

13.1

13,968

4,794

12,705

-2,987

54,108

19,079

35.3

35,029

38,167

52.4

2018

5,36,612

11.6

76,339

14.2

14,151

2,751

9,870

277

69,584

23,400

33.6

46,183

45,699

31.8

2019

7,51,268

40.0

95,287

12.7

15,502

1,385

15,712

-3,263

90,848

30,592

33.7

60,257

63,264

30.5

2020

7,18,764

-4.3

83,694

11.6

18,360

1,085

14,168

1,016

79,434

13,227

16.7

66,206

74,193

9.9

2021E

5,93,889

-17.4

80,174

13.5

18,706

1,546

11,335

71,257

17,935

25.2

53,321

-19.5

(INR m)

2022E

7,35,108

23.8

1,03,469

14.1

19,063

2,100

10,201

92,507

23,284

25.2

69,223

29.8

Balance Sheet

Y/E March

Sha re Ca pital

Res erves

Net Worth

Loa ns

Deferred Tax

Capital Employed

Gros s Fixed Assets

Les s: Depreciation

Net Fixed Assets

Ca pi tal WIP

Investments

Current Assets

Inventory

Debtors

Ca s h & Ba nk Balance

Loa ns/Adv. & Other As sets

Current Liab. & Prov.

Li a bilities

Provi s ions

Net Current Assets

Application of Funds

E: MOFSL Es ti mates

2015

12,685

2,78,510

2,91,195

80,483

33,087

4,04,765

4,13,893

2,15,047

1,98,845

1,22,352

43,224

20,811

30,945

11,416

1,01,339

1,07,610

16,558

40,344

4,04,765

2016

12,685

3,38,261

3,50,946

68,457

40,714

4,60,116

4,33,777

1,49,107

2,84,670

34,202

85,847

16,094

38,095

17,939

81,127

86,355

11,503

55,397

4,60,116

2017

16,913

3,64,581

3,81,494

38,186

46,559

4,66,239

4,52,646

1,67,584

2,85,062

38,034

95,096

16,984

38,282

13,419

75,823

81,327

15,133

48,047

4,66,239

2018

22,551

3,80,731

4,03,281

17,517

46,309

4,67,108

4,69,633

1,81,736

2,87,898

55,140

99,531

19,195

40,515

25,294

99,558

1,45,740

14,283

24,539

4,67,108

2019

22,551

4,18,379

4,40,929

16,157

59,477

5,16,564

5,08,099

1,97,238

3,10,861

92,025

95,282

23,219

50,743

12,147

59,510

1,12,969

14,253

18,397

5,16,564

2020

45,101

3,94,610

4,39,711

43,098

44,972

5,27,781

5,48,260

2,15,598

3,32,662

1,05,819

78,772

29,601

55,759

8,039

74,684

1,44,709

12,847

10,527

5,27,781

2021E

45,101

4,29,293

4,74,395

60,000

44,972

5,79,367

5,98,645

2,34,303

3,64,342

1,05,603

78,772

21,152

47,186

1,355

74,684

1,00,880

12,847

30,650

5,79,367

(INR m)

2021E

45,101

4,74,321

5,19,422

80,000

44,972

6,44,394

6,87,949

2,53,366

4,34,582

1,05,603

78,772

26,182

58,406

3,880

74,684

1,24,868

12,847

25,437

6,44,394

13 Augus t 2020

GAIL

Financials and Valuations

Ratios

Y/E March

Basic (INR)

EPS

Ca s h EPS

Book Va lue

DPS

Pa yout (i ncl. dvd ta x)

Valuation (x)

P/E

Adj. P/E (for i nvestments)

Ca s h P/E

EV / EBITDA

EV / Sa l es

Pri ce / Book Value

Di vi dend Yi eld (%)

Profitability Ratios (%)

RoE

RoCE

RoIC

Turnover Ratios

Debtors (No. of Days)

Fi xed Asset Turnover (x)

Leverage Ratio

Net Debt / Equity (x)

2015

6.6

8.9

64.6

1.7

30.1

14.8

9.6

10.9

4.4

0.4

1.5

1.8

10.8

8.2

11.6

1.4

0.24

2016

5.1

8.0

77.8

1.5

36.5

19.0

12.3

12.1

4.2

0.4

1.2

1.5

7.2

6.4

7.0

1.1

0.14

2017

8.5

10.9

84.6

3.2

50.1

11.5

7.4

8.9

3.1

0.5

1.1

3.3

9.6

8.7

9.9

1.0

0.06

2018

10.1

13.4

90.2

3.9

45.5

9.6

6.2

7.3

3.1

0.5

1.1

4.0

11.8

10.2

13.6

1.1

-0.02

2019

14.0

16.8

98.9

3.8

34.7

6.9

4.5

5.8

2.0

0.3

1.0

3.9

14.3

12.9

17.5

1.5

0.01

2020

16.5

18.8

105.9

6.4

52.5

5.9

3.8

5.2

4.7

0.6

0.9

6.6

15.0

12.7

16.7

1.4

0.08

2021E

11.8

16.0

113.5

3.4

35.0

8.2

5.3

6.1

5.2

0.8

0.9

3.5

11.7

9.8

12.6

1.0

0.1

2022E

15.3

19.6

123.5

4.5

35.0

6.3

4.1

5.0

4.8

0.7

0.8

4.6

13.9

11.6

14.9

1.1

0.1

Cash Flow Statement

Y/E March

OP/(Los s) before Tax

Depreciation

Ta x pa id

Cha nge i n deferred ta x liability

(Inc)/Dec in Wkg. Ca pital

CF from Op. Activity

(Inc)/Dec in FA & CWIP

Free Cash Flow

(Pur)/Sa le of Investments

CF from Inv. Activity

Others

Inc / (Dec) i n Debt

Di vi dends Paid

CF from Fin. Activity

Inc / ( Dec) in Cash

Add: Opening Balance

Closing Balance

E: MOFSL Es ti mates

2015

42,844

9,743

-12,452

7,423

-16,864

30,693

-18,895

11,798

-2,194

-21,089

-771

-14,778

-9,148

-24,698

-15,093

26,510

11,416

2016

31,728

13,131

-8,739

7,627

-8,531

35,216

-10,805

24,411

-42,624

-53,429

45,160

-12,026

-8,399

24,735

6,522

11,416

17,939

2017

54,108

13,968

-19,079

5,845

2,830

57,672

-18,192

39,480

-9,249

-27,441

13,055

-30,270

-17,535

-34,751

-4,520

17,939

13,419

2018

69,584

14,151

-23,400

-250

35,383

95,468

-34,094

61,375

-4,434

-38,528

-3,361

-20,669

-21,035

-45,065

11,875

13,419

25,294

2019

90,848

15,502

-30,592

13,168

-7,004

81,922

-75,350

6,573

4,249

-71,101

-1,707

-1,360

-20,901

-23,968

-13,147

25,294

12,147

2020

79,434

18,360

-13,227

-14,505

3,762

73,823

-53,956

19,867

16,510

-37,446

-32,634

26,940

-34,791

-40,484

-4,108

12,147

8,039

2021E

71,257

18,706

-17,935

-26,807

45,220

-50,169

-4,948

-50,169

16,902

-18,638

-1,735

-6,684

8,039

1,355

(INR m)

2022E

92,507

19,063

-23,284

7,738

96,024

-89,304

6,721

-89,304

20,000

-24,196

-4,196

2,525

1,355

3,880

13 Augus t 2020

GAIL

Ex planation of Inv estment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We hav e forw ard looking estimates for the stock but w e refrain from assigning recommendation

*In case the recommendation giv en by the Research Analyst is inconsistent w ith the investment rating legend for a continuous period of 30 days, the Research Analy st shall w ithin

follow ing 30 day s take appropriate measures to make the recommendation consistent w ith the inv estment rating legend.

Disclosures

The follow ing Disclosures are being made in compliance w ith the SEBI Research Analy st Regulations 2014 (herein after referred to as the Regulations).

Motilal Osw al Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the

Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant servic es & distribution of v arious financial products.

MOFSL is a subsidiary company of Passionate Inv estment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company , the details in respect of w hich are av ailable on

w ww.motilaloswal.com. MOFSL (erstw hile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading

Member w ith National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity

& Deriv ativ es Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository

Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &

Dev elopment Authority of India (IRDA) as Corporate Agent for insurance products.

Details of associate entities of Motilal Osw al Financial Serv ices Limited are av ailable on the

w ebsite at

http://onlinereports.motilalosw al.com/Dormant/documents/List%20of%20Associate%20companies.pdf

MOFSL and its associate company(ies), their directors and Research Analy st and their relativ es may; (a) from time to time, have a long or short position in, act as principal in, and

buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction inv olv ing such securities and earn brokerage or other

compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may hav e

any other potential conflict of interests w ith respect to any recommendation and other related information and opinions.; however the same shall have no bearing w hatsoev er on the

specific recommendations made by the analyst(s), as the recommendations made by the analy st(s) are completely independent of the v iew s of the associates of MOFSL ev en

though there might ex ist an inherent conflict of interest in some of the stocks mentioned in the research report

MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should

be aw are that MOFSL may have a potential conflict of interest that may affect the objectiv ity of this report. Compensation of Research Analy sts is not based on any specific merchant

banking, inv estment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are av ailable on the w ebsite at

https://galax y .motilalosw al.com/ResearchAnaly st/PublishView Litigation.aspx

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may v ary based on Fundamental

research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from

MOFSL research activ ity and therefore it can hav e an independent v iew w ith regards to Subject Company for w hich Research Team hav e ex pressed their v iew s.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or

use w ould be contrary to law , regulation or w hich w ould subject MOFSL & its group companies to registration or licensing requirements w ithin such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong

Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Law s of Hong Kong) “SFO”. As per SEBI (Research Analy st

Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement w ith Motilal Osw al capital Markets (Hong Kong) Priv ate Limited for distribution of

research report in Hong Kong. This report is intended for distribution only to “Professional Inv estors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activ ity

to w hich this document relates is only av ailable to professional inv estor and w ill be engaged only w ith professional inv estors.” Nothing here is an offer or solicitation of these

securities, products and services in any jurisdiction where their offer or sale is not qualified or ex empt from registration. The Indian Analy st(s) w ho compile this report is/are not

located in Hong Kong & are not conducting Research Analy sis in Hong Kong.

For U.S.

Motilal Osw al Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Ex change Act of 1934, as amended (the"1934 act") and under

applicable state law s in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"

and together w ith the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and

inv estment services prov ided by MOFSL , including the products and serv ices described herein are not av ailable to or intended for U.S. persons. This report is intended for

distribution only to "Major Institutional Inv estors" as defined by Rule 15a-6(b)(4) of the Ex change Act and interpretations thereof by SEC (henceforth referred to as "major institutional

inv estors"). This document must not be acted on or relied on by persons who are not major institutional inv estors. Any inv estment or inv estment activ ity to w hich this document

relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the ex emption from registration prov ided by Rule

15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order

to conduct business with Institutional Inv estors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Osw al Securities

International Priv ate Limited. ("MOSIPL"). Any business interaction pursuant to this report w ill hav e to be ex ecuted w ithin the prov isions of this chaperoning agreement.

The Research Analy sts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analy st may not be associated persons of the U.S.

registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication w ith a subject company , public

appearances and trading securities held by a research analy st account.

For Singapore

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) w hich is a holder of a capital markets

serv ices license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and

Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in

respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Inv estors”, of

w hich some of w hom may consist of "accredited" institutional inv estors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the

SFA”). Accordingly , if a Singapore person is not or ceases to be such an institutional inv estor, such Singapore Person must immediately discontinue any use of this Report and

inform MOCMSPL.

Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

********************************************************************************************************************************

13 Augus t 2020

GAIL

The associates of MOFSL may hav e:

- financial interest in the subject company

- actual/beneficial ow nership of 1% or more securities in the subject company

- receiv ed compensation/other benefits from the subject company in the past 12 months

- other potential conflict of interests w ith respect to any recommendation and other related information and opinions.; however the same shall hav e no bearing w hatsoev er on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the v iew s of the associates of MOFSL ev en

though there might ex ist an inherent conflict of interest in some of the stocks mentioned in the research report.

- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

- be engaged in any other transaction involv ing such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)

discussed herein or act as an adv isor or lender/borrow er to such company (ies)

- receiv ed compensation from the subject company in the past 12 months for inv estment banking / merchant banking / brokerage serv ices or from other than said serv ices.

The associates of MOFSL has not receiv ed any compensation or other benefits from third party in connection w ith the research report

Abov e disclosures include beneficial holdings ly ing in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not

consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from

clients w hich are not considered in abov e disclosures.

Analyst Certification

The v iews expressed in this research report accurately reflect the personal views of the analy st(s) about the subject securities or issues, and no part of the compensation of the

research analy st(s) w as, is, or w ill be directly or indirectly related to the specific recommendations and v iew s ex pressed by research analy st(s) in this report.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and

may not be altered in any way, transmitted to, copied or distributed, in part or in w hole, to any other person or to the media or reproduced in any form, without prior written consent of

MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.

The information is obtained from publicly av ailable media or other sources believ ed to be reliable. Such information has not been independently v erified and no guaranty ,

representation of w arranty , express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change w ithout notice. The

report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments for the clients. Though disseminated to all the customers simultaneously , not all customers may receive this report at the same time. MOFSL w ill not treat recipients as

customers by v irtue of their receiv ing this report.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,

in part or in w hole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose

and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report

constitutes inv estment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to y our specific circumstances. The securities

discussed and opinions expressed in this report may not be suitable for all inv estors, who must make their ow n inv estment decisions, based on their ow n inv estment objectiv es,

financial positions and needs of specific recipient. This may not be taken in substitution for the ex ercise of independent judgment by any recipient. Each recipient of this document

should make such investigations as it deems necessary to arrive at an independent evaluation of an inv estment in the securities of companies referred to in this document (including

the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be

suitable for all inv estors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - inv olv e substantial

risk and are not suitable for all inv estors. No representation or w arranty, express or implied, is made as to the accuracy , completeness or fairness of the information and opinions

contained in this document. The Disclosures of Interest Statement incorporated in this document is prov ided solely to enhance the transparency and should not be treated as

endorsement of the v iews expressed in the report. This information is subject to change w ithout any prior notice. The Company reserv es the right to make modifications and

alternations to this statement as may be required from time to time w ithout any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect

or hav e effected an ow n account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform inv estment

banking or other serv ices for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and

independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already

av ailable in publicly accessible media or developed through analy sis of MOFSL. The views expressed are those of the analy st, and the Company may or may not subscribe to all the

v iew s expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other

person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by , any person or entity who is a citizen or resident of

or located in any locality, state, country or other jurisdiction, where such distribution, publication, av ailability or use w ould be contrary to law , regulation or w hich w ould subject

MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category

of inv estors. Persons in whose possession this document may come are required to inform themselv es of and to observ e such restriction. Neither the Firm, not its directors,

employ ees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost rev enue or lost profits that may

arise from or in connection w ith the use of the information.

The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any

and all responsibility /liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold

MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,

expenses that may be suffered by the person accessing this information due to any

errors and delay s.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website

www.motilaloswal.com.CIN

no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex , New Link Road,

Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Osw al Financial Serv ices Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analy st:

INH000000412. AMFI: ARN - 146822; Inv estment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company

Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management

Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of

Mutual Funds, PMS, Fix ed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Inv estment Advisors II Pv t. Ltd. w hich is a

group company of MOFSL. Private Equity is offered through Motilal Oswal Priv ate Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Adv isory

serv ices is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee

of the returns. Inv estment in securities market is subject to market risk, read all the related documents carefully before inv esting. Details of Compliance Officer: Name: Neeraj

Agarw al, Email ID: na@motilalosw al.com, Contact No.:022-71881085.

* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National

Company Law Tribunal, Mumbai Bench.

13 Augus t 2020