Tariff orders on GAIL’s 3 major pipelines may not come soon

We met GAIL's management recently. The company indicated that tariff orders on three larger

pipelines are unlikely anytime soon. We met GAIL’s management recently. The company indicated

that tariff orders on three larger pipelines are unlikely anytime soon. A favorable verdict in its case

against PNGRB in the Delhi High Court is a potential near term trigger in this segment.

Tariff orders on three major pipelines unlikely anytime soon. the Delhi High court verdict, a potential

near term trigger. Management indicated that tariff orders on the three larger pipelines (HVJ, DVPL-

GREP and DUPL/DPPL) which together accounted for 90% of revenues in FY16 are unlikely anytime

soon.

For revised tariffs to be effective in FY17, they would need to be published by September.

GAIL said petrochemical production at Pata which had declined to 340KT in FY16 despite

commissioning of new capacity.

While it refrained from giving exact numbers, we have built in over 600KT production in FY17 and

expect EBIT in the segment to swing from a loss of Rs 8 billion in FY16 to profit of over Rs 5 billion in

FY17 implying an EPS swing of over Rs 7/share.

NGS INDIA