Maharatna PSU oil and gas company, GAIL (India) started the month of October on a bearish note. From September 30 to October 4th of this year, GAIL stock's weekly performance is down by 1.4% on BSE. Also, the stock is down by 6.5% from its 52-week high of Rs 246.35 apiece. The majority of consensus on GAIL stock are split between sell and buy.
GAIL Share Price:
GAIL stock price ended at Rs 230.35 apiece, down by 4.06% on BSE, on Friday last week. The company's market cap is at Rs 1,51,457.42 crore.
Included in the 'A' category of stocks, GAIL's price-to-equity ratio is at 14.92x, while the price-to-book ratio is at 2.36% as of October 4, 2024. GAIL stock's return on equity is at 15.81%, which is healthy.
Also, despite the weekly drop, GAIL is still in positive in its YTD performance, with gains of over 38.5%. In a year, the stock rallied by 89.20%.
Does that mean GAIL shares are overvalued? As per Alpha Spread, the intrinsic value of one GAIL stock under the Base Case scenario is 239.52 INR. Compared to the current market price of 229.88 INR, GAIL (India) Ltd is Undervalued by 4%.
GAIL is among the leading PSU stocks that pay hefty dividends. As per Trendlyne data, GAIL has paid up to 47 dividends since September 2001. GAIL is also among the highest bonus issue distributors to its investors.
Noteworthily, the natural gas producer has a long track record of rewarding bonus shares. The first time, GAIL turned ex-bonus was on October 6, 2008, for its bonus issue in the ratio of 1:2. After nearly a decade, GAIL rewarded two back-to-back bonus shares of 1:3 each in March 2017 and March 2018. Later on, the company also paid bonus shares in the ratio of 1:1 in July 2019. The latest bonus issue is of 1:2 which was in September 2022.
With the shares being undervalued, is it the time to buy GAIL stock?
As per the Trendlyne data, the consensus recommendation from 31 analysts for GAIL (India) Ltd. is HOLD. Of the total, 12 analysts recommended 'Strong BUY' on GAIL, while 6 suggested 'BUY'. However, 3 analysts advise to 'HOLD' the stock, while 2 other analysts suggest 'SELL'. The rest of the 8 analysts have recommended 'STRONG SELL' on GAIL. The 1-year average target price is at Rs 239.68 apiece, hinting at a potential 4.12% upside ahead.
However, at the latest, Antique Stock Broking has suggested SELL on GAIL for a target price of Rs 196.
On the other hand, HDFC Securities recommends BUY. Its note said, "Our BUY recommendation for GAIL with a target price of INR 260 is based on (1) an increase in gas transmission volume to 144mmscmd by FY26E (two-year CAGR of 9%), supported by completion of major pipelines in eastern and southern India and stabilising LNG prices, (2) continued robust profitability in the gas trading segment, and (3) expectation of improvement in earnings from the petchem segment. At the current price, GAIL is trading at 11.6x Mar-26E EPS, only a 1% premium to its five-year average despite the stronger volume growth outlook in its core business of gas transmission."
Last week, on October 4, GAIL announced that they had signed an MoU with AM Green B.V. (AMG) to explore projects aimed at advancing sustainable energy solutions in India. The partnership focuses on the long-term supply of carbon dioxide (CO2) for eMethanol production and the exploration of hybrid renewable energy project across India.
Both GAIL and AM have envisaged to undertake studies for long-term supply of around 350 KTA CO2 generated by GAIL in its gas processing plants to produce eMethanol, an environmentally friendly fuel that can reduce carbon emissions and promote a circular economy. GAIL shall also have an equity option to invest in the proposed eMethanol project, ensuring a strategic partnership that supports both companies' objectives in promoting sustainable energy solutions. Further, both the parties envision to jointly explore setting up of solar/wind hybrid renewable projects up to 2.5 GW across India.
Click it and Unblock the Notifications
Sign in with Google