GAIL (NS: GAIL ) (India): Our BUY recommendation on GAIL with a price target of INR 195 is based on 9% CAGR expansion in gas transmission volume over FY21-23E to 124mmscmd on the back of (1) increase in domestic gas production, (2) increase in demand of RLNG, and (3) completion of major pipelines in the eastern and southern parts of India. 4QFY21 EBITDA/APAT were 7/7% below our estimates owing to higher-than-expected raw material cost and operating expenses, offset by an 8% rise in revenue and lower-than-expected finance cost and tax outgo.
Star Cement Ltd (BO: STAT ): Star Cement reported a weak show in 4QFY21. Consolidated revenue rose 10% YoY to INR 6.03bn on 4/12% volume/NSR growth. However, EBITDA declined 16% YoY to INR 1.04bn due to significant cost inflation. Lower tax rate moderated APAT (at INR 853mn) decline to 1% YoY. We expect the margin to expand in FY22 onwards on production ramp-up. We maintain our BUY rating with a revised target price of INR 125 (8x FY23 consolidated EBITDA).
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