Shares of GAIL India rallied over 5 percent on Tuesday after global brokerage firm Macquarie raised the target price on the stock and maintained its Outperform rating. The brokerage house has set a new target of Rs 205 on the stock from Rs 185 earlier.

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It has raised the target assuming 8x EV-EBITDA for transmission business and B2B gas marketing and factors in 6x EV-EBITDA for petchem and LPG, 20 percent corporate discount, it said.

Macquarie also raised FY22-24 EPS estimates by 10-13 percent on better modelling of petchem margin.

The state-run gas company has announced its plans to foray into ethanol and hydrogen production and is also looking to expand its presence in the petrochemicals segment.

The company will be selectively investing in the renewable energy domain given the future growth potential

“The global energy sector is witnessing a paradigm shift in recent years as the world is transitioning to a sustainable energy future. To accomplish a cleaner primary energy mix for India, the government is emphasizing the expansion of the natural gas sector so as to achieve a gas-based economy along with growth in renewables. GAIL as a leading integrated energy major has aligned with this vision,” Manoj Jain, Chairman and Managing Director, GAIL India said in its latest annual report.

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GAIL to foray into ethanol & hydrogen production

“Your company has been scouting for opportunities to scale up the RE portfolio from the current 130 MW through bidding and other inorganic routes such as mergers and acquisitions. In addition, your company is also foraying into ethanol and hydrogen generation,” he added.

At 12:30 pm, the shares of GAIL India were trading 2.49 percent higher at Rs 144.25 apiece on the BSE.

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(Edited by : Anshul)