Gail Ltd: A Gas Distribution Co Forming A 9-Week Cup Without Handle Base

May 21 2021

Gail (India) Ltd stock has cleared a 9-week, 19% deep Cup Without Handle Base this week. Currently, the stock is trading around just -6% away from its ideal buy price of INR 158. The stock is offering investors an opportunity to get on board at the current price.


The key trend lines, 10 and 40-week moving averages are at a comfortable position. The current trends of both the averages are upward and the 10-week moving average is trending above the 40-week moving average. The current price of the stock is trading around 5.04% away from the 10-week moving average.


In the last twelve months, Gail (India) Ltd. has rallied nearly 78% as compared to 61.1% for the Nifty500. It has a Relative Strength Rating of 62. We definitely would like to see improvement in the rating. At this point we are taking a step back and focusing on the RS Line.


The Relative Strength Line of the stock is offering a lot of encouragement to investors. It has been making good progress in the last four weeks. The overall long term trend of the line is also trending upward. If Gail (India) Ltd. can maintain this outperformance, it could make sense as a CANSLIM trade.


Gail (India) Ltd. stock has strong institutional support. The Accumulation/Distribution Rating of 'A' represents heavy institutional buying over the past few weeks. Although the shares held by institutions dropped in the last quarter, the number of institutions holding the stock increased at the same time. This shows increasing interest among the institutions.


On the earnings front, Gail (India) Ltd. has an excellent EPS Rank of 83, which indicates consistency in earnings. The earnings and sales for the stock have grown by 25% and 5%, respectively over the past three years. Its 3-years earnings stability is 10, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 40% and 8%, respectively. The 5-years earnings stability is 17. The return on equity for the last reported year is 20%.


The current price of Gail (India) Ltd. is -11% off from its 52-week high price and 82% above its 52-week low price. The stock belongs to the industry group of Utility-Gas Distribution, which is exhibiting excellent strength in the current market environment. The current industry group rank is 8.


The stock appears on our idea lists: Trend Template - 5 Months.


Natural gas is the cleanest fossil fuel available; It can be transported by first removing all the impurities and liquefied at a-162 Degree centigrade which shrinks its volume 600 times, making it easy for transportation.


Gail Ltd Stock: Engaged in the exploration, processing, transmission, distributing, and marketing of natural gas. Co’s segments are Transmission Svcs, Natural Gas Marketing, Petrochemical, LPG Hydrocarbon, and Others.


Gail has an existing 13,389 Km of gas pipeline network over 20 states with a capacity of 204 MMSCMD, it sells about 52% of its natural gas domestically of which 21% goes to the power sector and about 43% goes for the fertilizer sector. It is the only Co in India to own and operate the LPG transition of 2,033KM of LPG pipeline.


A few Co in the same line of business are Adani Total Gas, Indraprastha Gas, Gujarat Gas, Gujarat State Petronet, and Maharaja Gas.

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