Motilal Oswal's research report on GAIL
GAIL’s 3QFY25 performance was significantly below our estimates, primarily due to weak gas marketing segment performance. While APAT came in 43% below our estimate, reported PAT was lifted by an exceptional income of INR24.4b booked during the quarter relating to the arbitration settlement with SEFE. Transmission volumes were weaker QoQ due to a decline in power sector demand in 3Q, while adverse spread movement on some of the gas contracts led to lower profitability on some of the marketing contracts. Overall, management expects transmission volumes to grow by ~10mmscmd in FY26 and remains hopeful of tariff hike approval for the transmission business in 1QFY26.
Outlook
We reiterate our BUY rating on GAIL with a TP of INR255. During FY24-27, we estimate a 15% CAGR in PAT driven by:
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