Nomura has reiterated its buy rating on GAIL (India) with a target price of ₹225 per share. At the current market price of ₹174.76, the target implies an upside of about 29 percent.
The brokerage said a tariff hike could provide a significant one-time boost to GAIL’s earnings. The company has submitted a request to the Petroleum and Natural Gas Regulatory Board (PNGRB) for a 33 percent increase in its integrated tariff to ₹78 per mmbtu. This request has been made mainly due to the higher cost of substitute gas consumed by compressors in pipeline operations, as administered price mechanism (APM) gas allocation has been progressively curtailed to zero, and because the regulator’s new capacity determination for GAIL’s integrated pipeline has come out lower than its previous estimate.
Nomura expects the PNGRB to approve a tariff increase to around ₹70 per mmbtu, translating into a 19.5 percent rise, applicable from April 2026. If implemented, this would result in a 42 percent year-on-year increase in gas transmission EBIT in FY27, while consolidated EBIT for the group could rise by 24 percent.
The brokerage also noted that GAIL’s petrochemicals segment, which has been under pressure, could see a recovery beginning FY27, adding further support to long-term earnings. Nomura concluded that the integrated tariff revision, combined with steady gas demand, positions GAIL favourably for a rerating in the medium term.
Disclaimer: The views and investment recommendations expressed above are those of Nomura. They do not represent the views of this publication. This article is for informational purposes only and is not investment advice.
