GAIL plans ₹30,000 cr capex in next 3 yrs; stock surges

Shares of petroleum and natural gas major GAIL (India) Ltd are trading 0.64% up today, despite the benchmark indices Sensex and Nifty being in the negative territory, as the company announced the state-owned PSU's plans for a capital expenditure of ₹30,000 crore in the next three years.

The GAIL stock opened a gap up at ₹118.85 and rose to an intra-day high at ₹119.20. At the current share price, the PSU's m-cap stands at ₹77,619 crore. Shares of the company have surged 4.14% in the past week; 1.46% in the past month; 14.16% in the past six months; and 22.15% since January 2023.

According to GAIL chairman Sandeep Kumar Gupta, the company plans to invest primarily in pipelines, petchem & city gas distribution projects, and equity contribution projects.

In the fiscal year 2022-23, GAIL made capital expenditure worth ₹10,000 crore, Gupta says in the annual shareholders' meeting. For the next calendar year, the PSU major aims for the completion of 4,200 km of pipelines, which will take its total pipelines under operation to 20,000 km.

Gupta says the company has incurred a capex of about ₹2,391 crore during the current quarter, mainly on pipelines, petrochemicals, equity to JVs, etc., which is about 31% of the annual target of ₹7,750 crore. He says GAIL has also been authorised to build the Gurdaspur-Jammu Natural Gas pipeline, having a length of 160 km, with a capex of ₹522 crore.

GAIL (India) has reported revenue of ₹32,227 crore in Q1 FY24 as against ₹37,572 crore in Q1 FY23. Its profit after tax (PAT) in Q1 FY24 stood at ₹1,412 crore as against ₹2,915 crore in Q1 FY23.

On a QoQ basis, PAT increased by 134% to ₹1,412 crore in Q1 FY24 against ₹604 crore in Q4 FY23, mainly on account of increased gas marketing and transmission volumes and increased transmission tariff realisation.

During the quarter, the natural gas transmission volume registered a growth of 7% to 116.33 MMSCMD in Q1 FY24 against 108.23 MMSCMD in Q4 FY23. Gas marketing volume increased 2% to 98.84 MMSCMD against 96.46 MMSCMD in the previous quarter.

Liquid Hydrocarbon sales increased 7% to 247 TMT against 230 TMT, and polymer sales also increased by 37% to 162 TMT against 118 TMT in comparison to the previous quarter. During the quarter, GAIL acquired a 100% stake in erstwhile JBF Petrochemicals Ltd, now GAIL Mangalore Petrochemicals Limited, by infusing ₹2,101 crore through the corporate insolvency resolution process (CIRP).

For FY 2023, GAIL had achieved the highest-ever gross turnover of ₹1,43,976 crore, an increase of 57% over the previous year, which was the first time the turnover of the company surpassed the ₹1-lakh crore mark.