• Gross Turnover: INR 32,814 crore in Q2 FY25.
• Profit Before Tax (PBT): INR 3,453 crore in Q2 FY25.
• Profit After Tax (PAT): INR 2,694 crore in Q2 FY25.
• Gas Marketing Volume: 96.60 MMSCMD in Q2 FY25.
• Natural Gas Transmission Volume: 130.63 MMSCMD in Q2 FY25.
• CapEx: INR 1,885 crore incurred in Q2 FY25.
• Gas Marketing Margin: INR 3,287 crore in H1 FY25.
• Polymer Production: 234 PMP in Q2 FY25.
• LPG Production: 252 PMP in Q2 FY25.
• CNG Stations: 194 stations with 3,765 new connections added in Q2 FY25.

• Warning! GuruFocus has detected 4 Warning Signs with STU:GQI.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GAIL (India) Ltd reported its highest ever PBT and PAT for the first half of FY25, driven by strong marketing margins and increased transmission volumes.
• The company achieved a gross turnover of INR 32,814 crore in Q2 FY25, showcasing robust financial performance.
• GAIL (India) Ltd's petrochemical segment returned to profitability in the first half of FY25, with plans to optimize sourcing to enhance profitability further.
• The company is on track with its major pipeline projects, with several expected to be completed by mid-2025, which will likely boost future transmission volumes.
• GAIL (India) Ltd has secured new LNG contracts that are reportedly cheaper than existing ones, potentially improving future cost efficiency.

Negative Points

• Gas marketing volumes decreased in Q2 FY25 due to reduced gas consumption by the power sector, attributed to prolonged monsoons and lower temperatures.
• The company's CapEx guidance for FY25 was revised down from INR 11,500 crore to a more conservative estimate of INR 8,000 to 9,000 crore.
• There was a significant drop in the contribution from the gas trading segment in Q2 compared to Q1, attributed to lower spreads between crude-linked LNG and Henry Hub LNG.
• The company faced challenges in sourcing volumes for marketing, leading to a reliance on spot market purchases, which did not yield the desired margins.
• Depreciation expenses decreased due to one-time adjustments, but future capitalizations could increase these costs again.

Q & A Highlights

Q: Can you clarify the decline in trading volumes due to reduced gas consumption by the power sector, while transmission volumes remained flat? A: The decline in marketing volume by INR3 million was due to reduced gas consumption by the power sector during monsoons. Transmission volumes remained flat because the gas was used internally or supplied to sectors where marketing margins were not applicable. (Shri Rakesh Kumar Jain, Director (Finance))

Q: What is the expected run rate for petrochemical volumes in the second half of the year? A: We expect to maintain the current production levels, reaching around 810 KTPA for the year, as previously guided. (Shri Rakesh Kumar Jain, Director (Finance))

Q: Could you provide an update on the overall CapEx guidance for the year? A: We plan to incur around INR8,000 to INR9,000 crore in capital expenditure this year, with a higher rate of spending expected in the second half. (Shri Rakesh Kumar Jain, Director (Finance))

Q: What caused the drop in gas trading segment contribution in Q2 compared to Q1? A: Q1 had higher margins due to increased marketing volumes and favorable arbitrage opportunities between Henry Hub and downstream contracts. These factors were less favorable in Q2, leading to reduced margins. (Shri Rakesh Kumar Jain, Director (Finance))

Q: What is the status of the tariff revision process with the regulator? A: We submitted our tariff petitions over 1.5 months ago and expect the regulator to process them, with a decision anticipated by March 31st, to be applied from April 1st. (Shri Rakesh Kumar Jain, Director (Finance))

For the complete transcript of the earnings call, please refer to the full earnings call transcript.