Buy GAIL; target of Rs 205: Motilal Oswal

Motilal Oswal's research report on GAIL

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. Further, the anticipated transmission tariff revision effective from Jan’26 is expected to raise the FY27 PAT by around 11% (revised TP: INR228/sh), serving as a key near-term catalyst. Transmission volumes are also set to rebound in FY27 as the impact of multiple one-off disruptions in FY26 wanes, with a recovery in power and fertilizer offtake and normalization of flood-impacted supplies. Government initiatives to further rationalize natural gas taxation can be a significant long-term positive. Reiterate BUY with a TP of INR205.

Outlook

We reiterate BUY on GAIL with our SoTP-based TP of INR205. Over FY26-28, we estimate a 9% CAGR in PAT, driven bybus: