GAIL up and about

GAIL is up and about in the green today. The stock is currently up 4.23% at Rs.347, closer to its intra day high at Rs.348. Its 52-week high stands at Rs.395.

The stock is up on unconfirmed news reports suggesting that the oil ministry is proposing to  exempt Gail from sharing an subsidy burden. This means that Gail might no longer have to pay any compensation to the OMCs for selling fuel below market prices. This decision is expected to be announced any time now and the logic for this exemption – Gail does not make windfall profits when international crude oil and gas prices soar. ONGC and Oil India are irked because they will continue to pay.

In FY13, ONGC, Oil India and Gail together shared a subsidy burden of Rs.60,000 crore of which Gail had picked up a tab for Rs.2687 crore. And if it does get exempted, this could be a direct addition to its earnings.