Buy

GAIL’s standalone EBITDA came in 5% above our estimate at INR31.9b. While gas transmission EBIT missed our estimate by 6%, the marketing segment posted a strong performance, and 1HFY26 EBIT now forms ~50% of the guidance of INR45b.

Mahanagar Gas (MGL) delivered volume growth with a 9% YoY jump in volume to 4.6mmscmd, including UEPL. However, sharply lower APM allocation, INR depreciation and higher spot LNG drove EBITDA/scm to a 13-quarter low.

We maintain our BUY recommendation on the stock.

GAIL’s valuations have corrected sharply from their Sep’24 highs, and the stock now trades close to its historical averages at ~1.1x one-year forward core P/B, offering limited downside driven by attractive dividend yield and robust FCF outlook.

As per media reports and our channel checks, Indraprastha Gas (IGL) could see a potential EBITDA/scm upside of 16-20% due to a change in the tax rate on gas sourced from Gujarat (official confirmation is awaited).

MAHGL is set to deliver robust earnings growth, driven by aggressive CNG network expansion, improving throughput at existing stations, and strategic land tie-ups that strengthen long-term visibility.

We initiate coverage on Mahanagar Gas Limited (MGL) with a BUY recommendation and a target price of Rs 1,540/share, implying a potential upside of 20% from the current market price (CMP)

VA Tech Wabag Limited (Va Tech) reported a strong performance during Q1FY2026 with sales growth of 17.2% y-o-y to Rs. 734 crore.

We maintain our BUY rating on the stock.

We maintain our BUY recommendation on the stock with a target price of Rs 1,920/share, offering 27% upside from the current levels.

In 1QFY26, IGL’s EBITDA margin of INR6.2/scm came in below our est. of INR6.8/scm. Volumes at 9.13mmscmd stood in line with our estimate.

GAIL’s 1QFY26 EBITDA/PAT came in 7%/9% below our estimates at INR33.3b/INR18.9b, as petchem and LPG segments delivered weak performance. 1QFY26 revenue included a one-time settlement gain of ~INR1.3b related to past differential tariff adjustments.

GAIL India (GAIL) reported 29%/34% YoY dip in Q1FY26 adj. EBITDA/PAT (flat/-13% QoQ) driven by weaker performance of gas trading and petchem. Gas trading performance declined by 47%/11% QoQ/YoY with sharply lower margins offsetting a 6mmscmd YoY jump in volume.

Mahanagar Gas (MAHGL)’s 1QFY26 adj. EBITDA margin of INR9.7/scm was below our est. of INR10.6/scm (reported EBITDA: INR12.9/scm).

The company's revenue grew in double digits. However, its margin and profitability declined due to higher cost of sales. Nevertheless, the management is optimistic about near-term prospects of the natural gas transmission business, driven by an expected transmission tariff hike and volume growth. It anticipates a revision in transmission tariffs by end-Q1FY26, with a conservative expectation of at least Rs. 70-72 per million metric British thermal units (mmbtu) being approved by the...

GAIL’s FY25 performance was steady, with ~8% growth in EBITDA and ~7% growth in PAT. Going forward, the company is set to see strong profitability via the imminent tariff increase in the transmission business, but the company is cognizant of headwinds in gas demand for FY26.

Valuations inexpensive: Over the last eight months, MAHGL’s share price has corrected ~30%, with the stock now trading at 11x FY27E P/E.

VA Tech Wabag Limited (Va Tech) reported a strong performance during Q4FY2025 with sales growth of 23.8% y-o-y to Rs. 1,156 crore. This helped them meet the 15% revenue growth guidance for FY25.

GAIL’s 4QFY25 EBITDA came in 11% above our est. at INR32.2b, as weak transmission and petchem performances were more than offset by robust gas marketing performance.

MGL’s Q4FY25 SA adj EBITDA/APAT of Rs3.2/2.1bn missed our estimates by 5%/6% due to 5% higher unit opex. EBITDA/scm of Rs8.3 was hence 5% below estimate and flat QoQ.