'Buy' retained on GAIL India – TP Rs.432 - Geojit BNP Paribas Financial Services

- Company has reported better than expected results for 3QFY12.

- PAT at Rs.1090 crore has been significantly better than market expectations.

- The beat was mainly due to lower than expected subsidy at Rs.540 crore and healthy marketing margin.

- Strong marketing margin is due to increasing LNG contribution to gas sales mix.

- Subsidy burden in 4QFY12 is expected to increase and the performance of the company in the quarter would be weak.

- Reiterate 'buy' on the stock due to attractive valuation and expected volume surprise. Currently, the stock is traded at 13 multiple of FY12 expected earnings and at 12.1 multiple of FY13 expected earnings.

- Volume is expected to surprise from ONGC's marginal fields and higher Dhabhol LNG utilization.

Source : Equity Bulls

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