ICICI Securitie's research report on GAIL India
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. Guidance for the same has been reduced by 3-4 mmscmd and similarly for FY27–28. Similarly, with a larger portion of gas tied up in back-to-back contracts and a narrowing US HH to spot LNG differential, prospects for gas trading are also lower than earlier estimates.
Outlook
We continue to see multiple drivers of optimism for the stock. Nearly 15-18mmscmd of volume addition over FY26–28E and stronger tariffs and additional delta from petchem (JBF acquisition to add capacity) imply that GAIL could see steady earnings growth over FY26–28E. Post a muted stock movement in the last six months (down 7%), valuations of 9.9x FY27E EPS and 7.4x FY27E EV/EBITDA are attractive; separately, our revised TP of INR 245 (FY28E multiples) offers 31% upside from CMP. Maintain BUY.
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