GAIL India reports a larger-than-expected decline in quarterly profits due to higher input costs

GAIL (India), a gas distributor, posted a lower-than-expected quarterly profit Monday as rising raw material costs put pressure on stable demand.

GAIL, India’s largest natural gas distributor based on market share, reported a 30.8% drop in its net profit (after tax) to 18.86 billion Rupees ($217.67 millions) for the three months ended June 30,

According to data compiled and analyzed by LSEG, analysts had predicted that profit would fall on average 26.6%, to 19.9 billion rupees.

The company's 3.3% increase in revenue was offset by a 22.66% jump in raw materials costs. This drove up total expenses by 7%.

Due to a decrease in domestic production, the Indian Government reduced the allocations of low-cost natural gas to city distributors.

India's gas production fell by 0.9% in April compared to the same period last year, and then by 3.6% in May. Then it dropped again by 2.8% in June.

City gas companies have turned to more expensive gas sources in order to maintain supplies.

GAIL's gas marketing segment reported a 5.3% increase to 310.03 Billion Rupees.

GAIL's revenue from its natural-gas transmission segment, which accounts for 70% of the market in India, dropped by 2.1%.

GAIL shares fell by 1.6% before the results were announced. ($1 = 86.6445 Indian rupees). (Reporting and editing by Shakesh Kuber in Bengaluru)

(source: Reuters)