Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GAIL (India) Ltd (GAILF, Financial) reported a 4% increase in turnover to INR 33,627 crores in Q1 FY '25, driven by robust performance in the gas transmission segment and higher natural gas prices.
- Profit before tax (PBT) increased by 28% to INR 3,642 crores, and profit after tax (PAT) rose by 25% to INR 2,724 crores compared to the previous quarter.
- GAIL (India) Ltd (GAILF) advanced its net zero carbon emission target for Scope 1 and Scope 2 emissions to 2035 from the earlier target of 2040.
- The company added 700 new DPNG connections and plans to add 50 new CNG stations and 120,000 new DPNG connections in the next two years.
- GAIL (India) Ltd (GAILF) is on track to complete several major pipeline projects, including the Mumbai-Nagpur-Jharsuguda pipeline and the Jagdishpur-Haldia Bokaro-Dhamra pipeline, within the current financial year.
Negative Points
- Polymer production decreased significantly by 86 TMT to 162 TMT in Q1 FY '25 due to annual turnaround activities.
- LHC production also saw a decline to 216 TMT from 265 TMT in the previous quarter, attributed to annual turnaround activities.
- LPG transmission volume decreased to 1,065 TMT from 1,114 TMT in the previous quarter.
- The company faced issues with the Dabhol breakwater facility, delaying its commissioning as an all-weather terminal.
- Despite the overall positive financial performance, the gas marketing volume remained flat at 99.47 MMSCMD compared to the previous quarter.
Q & A Highlights
Q: You've already touched 132 million cubic meters a day now. Are you expecting some bit of reduction in the current quarter given that the power demand from the gas station might slow down a bit? Or are you still seeing the same number flow through? And in which case, is there an upside to your 132 million cubic meters guidance for fiscal '25?
A: There is no upside as of now we are communicating. We maintained our guidance of 130 to 132 MMSCMD on a full year basis.
Respondent: Rakesh Jain, Chief Financial Officer
Q: On the marketing side, you're almost halfway through the guidance and now you're guiding for INR4,500 crores to be lower end. What should one assume higher end of the guidance given the current hedging that you would have done so far?
A: We have been giving guidance for many months. In order to maintain that, we take a lot of positions in the market and do optimization activities. The guidance is based on what we have locked in so far. We will revise our guidance based on the results of Q2 during the Q2 earnings call.
Respondent: Rakesh Jain, Chief Financial Officer
Q: Can I get a sense of how many days the polymer shutdown was for? And what is the current run rate of petrochemicals that you're seeing in Q2 so far?
A: Shutdown was almost for a period of 1-month, 30 days. On a proportionate basis, we are running at a rate of 105%. We expect to achieve our capacity of 810,000 and even surpass that.
Respondent: Rakesh Jain, Chief Financial Officer
Q: With respect to Dabhol's breakwater facility, any update on the timelines and progress on that side?
A: Activities are on course. We have resolved the issue of access to the site. After this monsoon, we will be able to complete it, making it an all-weather terminal.
Respondent: Rakesh Jain, Chief Financial Officer
Q: Gas transmission volume has increased close to 8 MMSCMD quarter-on-quarter. Can you give us an idea how much of this was from the gas power plant?
A: Around 4 to 5 MMSCMD for the quarter. Gas power plant demand has come up, and there are also fertilizer plants which were under shutdown during Q1.
Respondent: Rakesh Jain, Chief Financial Officer
Q: Recently, the PNGRB has revised upwards the LPG pipeline tariffs. What is the impact on the LPG business for GAIL?
A: The impact on GAIL is around INR 120 crores to INR 140 crores of profit before tax on an annual basis. The tariff increase will be around 3.4%.
Respondent: Rakesh Jain, Chief Financial Officer
Q: How should we look at the gas trading volume number going forward? Are we expecting the 5 MMSCMD increase you guided for?
A: We expect 5 MMSCMD of volume increase, driven by power demand, City Gas Distribution, fertilizer plants, and new customers along the pipelines being commissioned. We are on course as of now.
Respondent: Rakesh Jain, Chief Financial Officer
Q: Can you share the cost of gas used for the petrochemicals and outlook for the Petrochemical business in FY '25-'26?
A: The cost of gas varies as we source from various points. We expect to have a reasonably good profit from the petrochemical business this year. Q1 results show we are almost at breakeven despite a 1-month shutdown.
Respondent: Rakesh Jain, Chief Financial Officer
Q: Do you have any sense in terms of when you will get the compensation for the cost of LNG used last year?
A: We have filed an appeal and expect the revised transmission tariff for the integrated pipeline to consider higher prices. We hope to resolve this by the end of this financial year or the beginning of the next.
Respondent: Rakesh Jain, Chief Financial Officer
Q: How are you seeing the sourcing strategy now going forward? Is there a mix you want to get to over the next 4 to 5 years?
A: Our intent is to maintain a mixed portfolio. We recently sourced 1.53 MMTPA from two suppliers on a crude-linked index. We will continue to look for the cheapest sources while maintaining a mixed portfolio.
Respondent: Rakesh Jain, Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
