GAIL spurts as company plans capex to construct additional pipelines

Last Updated: Thu, Dec 07, 2017 13:48 hrs

Shares of GAIL (India) Limited are up sharply on strong volumes on the bourses today, buoyed by an announcement from the company about plans for capital expenditure.

The gas utility major has announced that it will invest about Rs 6000 crore and spend most of it to construct an additional 2500 kilometres of gas pipelines over the next three years.

It may be noted that the 380-km Kochi-Mangalore pipeline that is already under execution benefits both GAIL and Petronet LNG and is expected to significantly add value for the shareholders of the two companies.

GAIL gets its revenue from gas transmission and gas marketing and various other segments. While the company gets nearly 20% of its revenue from gas transmission business that is spread across the country, and 10% from gas marketing, the rest is derived from other segments.

GAIL (India) Limited had a pretty good second quarter, recording a sharp 42% jump in net profit at Rs 1310 crore, over its net profit of Rs 925 crore in the quarter ended September 2016. Strong performance by the company's liquid hydrocarbon and NG transmission & marketing segments contributed to the surge in revenue in the second quarter.

With all the segments registering growth sequentially and on year-on-year basis as well, the near to medium term outlook for GAIL stock looks extremely good.

In early November this year, the company announced that the Uttar Pradesh government had issued directions to facilitate smooth and timely execution of capital investments under the natural gas projects in the State at an outlay of about Rs 4000 crore.

The share price of GAIL (India) Limited touched a fresh 52-week  high of Rs 488 on BSE tjos afternoon on unusually high volumes. At Rs 486, the stock is currently up 6.5% from its previous closing price. On BSE, the GAIL counter has clocked a volume of about 3.45 lakh shares so far in the session, as compared to average daily volume of just around 66,000 shares.

On the National Stock Exchange, the stock spurted to a high of Rs 487.90. The GAIL counter on NSE has clocked a volume of about 7.2 million shares so far in the session.

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