First cut | GAIL Q3: Weak performance in gas marketing, petrochemicals

GAIL (India) reported a decent year-on-year (YoY) performance in Q3. However, the growth remained tepid sequentially. Margins saw some weakness. While the gas transmission business remained healthy, petrochemicals and natural gas marketing businesses remained weak sequentially.

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-While the overall revenue increased 37 percent YoY, the performance was near flattish on a sequential basis.

-EBITDA improved 34 percent YoY but was down almost 9 percent on a quarter-on-quarter (QoQ) basis

-Higher input costs ate away a portion of the operating profits despite inventory gains and a cut in employee expenses, finance costs and other expenses.

-Gas transmission business posted a healthy performance with robust margin improvement. LPG transmission segment reported strong growth.

-While the topline growth for natural gas marketing remained muted, profits and margins from the segment were down sharply majorly due to weak economics in the US LNG volumes

-Performance in the petrochemical business remained substantially weak with margins contracting both on YoY and QoQ basis.

-Performance in the LPG and liquid hydrocarbons segment remained decent with revenue and profits growth in line with expectation.

-While the overall performance seems to be decent on a YoY basis, several factors have impacted the sequential play especially in the natural gas marketing and petrochemical businesses.