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Gail India (Rs. 348.00) (Code : 532155)

Gail India (Rs. 348.00) (Code : 532155) : The GAIL India stock gained 10 per cent in three trading sessions last week on some positive news. The company stands to be a key beneficiary of the draft hydrocarbon policy announced earlier last week. If implemented, this will free pricing of domestic gas (currently regulated), which would boost gas production. This means utilisation of GAIL and other gas pipeline companies could improve significantly over the next few years. GAIL has been operating its pipelines below 40 per cent utilisation for the past few quarters. Second, Mumbai’s sole authorised distributor of CNG and PNG - Mahanagar Gas- has filed its draft prospectus on November 16, in which GAIL is looking to sell about 14 per cent stake (of its nearly 50 per cent shareholding). This monetisation will rub off favourably on GAIL and improve its cash kitty. Mahanagar Gas is India’s third largest city gas distribution company and a higher than estimated initial public offering (IPO) valuation would give a leg-up to GAIL’s sum of the parts valuations.Two leading brokerages BNP Paribas and Goldman Sachs, recently upgraded the stock.The stock is risk free at this level and has huge opporutnity. Buy.

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