GAIL (India) Ltd. share price target

Revenue declined by 4.5%YoY and EBITDA by 7.6%YoY, impacted by Gas-transmission and Petchem performances

Weak marketing, petchem, and LPG segments drag 3Q performance: In 3QFY26, GAIL’s standalone EBITDA came in 9% below our estimate at INR26.6b. The weakness in results was largely driven by the poor performance of the marketing, petchem, and LPG segments.

On 27th Nov’25, the Petroleum and Natural Gas Regulatory Board (PNGRB) issued a tariff order for GAIL’s integrated natural gas pipeline network.

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.

Q2 revenue performance was above expectations due to better-than-expected gas marketing business performance

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.

GAIL reported transmission volume of 121mmscmd, flat QoQ, down from 132mmscmd in Q1FY25. Trading volume stood at 105.5mmscmd, marginally below 106.5mmscmd in Q4FY25 but up from 99.5mmscmd in Q1FY25. Trading EBIT came in at Rs10.7bn, down from Rs12bn in Q4FY25 and Rs20.3bn in Q1FY25. EBITDA stood at Rs33.3bn (Ple Rs32.3bn, BBGe Rs32.6bn, -26% YoY, +4% QoQ). PAT came in at Rs18.9bn (Ple Rs20bn, BBGe Rs20.5bn, -31% YoY, 8% QoQ). The stock trades at 12.5x FY27 EPS. We value the company at 11x adj...

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.

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.

GAIL reported in-line results with EBITDA of Rs32bn (-10% YoY, +13% QoQ, Ple Rs31.2bn, consensus Rs30.5bn) PAT came in at Rs20.5bn (-6% YoY, Ple Rs19.6bn, consensus Rs20.3bn) Previous quarter had an exceptional gain of Rs24bn. For the year, adj PAT stood at Rs88.7bn, flat YoY. We expect steady growth in transmission volume from 127mmscmd in FY25 to 139mmscmd in FY26 and to 149mmscmd in FY27. However, trading segment's EBIT is expected to normalize to Rs51bn from Rs74.5bn in FY25. Tariff hike of integrated network...

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.

GAIL’s Q3FY25 result disappointed the street, with multiple one-offs dragging trading segment earnings and reigniting the long-held apprehension on the unpredictability of trading segment.

In the last five-and-a-half months, GAIL’s share price has corrected ~30% with the stock now trading at 9.2x FY27E P/E. We maintain our positive outlook on GAIL.

GAIL’s 3QFY25 performance was significantly below our estimates, primarily due to weak gas marketing segment performance.

We upgrade GAIL to BUY from Add due to the recent stock correction, and lower Sep-25E TP by 5% to Rs255.