CLSA has reiterated its ‘Outperform’ rating on GAIL (India) Ltd with a target price of ₹210, stating that the company’s Q4FY25 performance slightly exceeded expectations, driven by strength in gas trading and LPG extraction, even as petrochemicals remained a weak link.
GAIL reported a 47% quarter-on-quarter drop in consolidated net profit to ₹2,049 crore, down from ₹3,867 crore in Q3FY25. The sharp fall was mainly attributed to an exceptional profit base in the previous quarter and volatility in non-core segments. However, on the operational front, the numbers remained robust.
Steady operational momentum with margin expansion
Consolidated revenue for Q4FY25 came in at ₹35,685 crore, up 2.1% from ₹34,937 crore in Q3. EBITDA grew 13.3% sequentially to ₹3,215 crore, while the EBITDA margin improved to 9.01% from 8.10%.
CLSA noted that GAIL’s gas trading segment was the standout performer this quarter, helping offset losses in the petrochemical division, which reported an EBIT loss. Gas transmission EBIT came in line with estimates, despite a ~3% miss on transmission volumes, which the brokerage attributed to transient demand factors. Meanwhile, LPG extraction EBIT exceeded expectations.
FY26 outlook: 6–8% volume growth in transmission
Post-results, GAIL’s management guided for 6%–8% year-on-year growth in gas transmission volumes for FY26, driven by improving industrial demand and enhanced pipeline connectivity. This aligns with the government’s ongoing efforts to raise the share of natural gas in India’s energy mix to 15% by 2030 from the current 6.7%.
CLSA views the guidance as credible and achievable, supported by visible infrastructure ramp-up and policy tailwinds.
Key concern: Petchem still lags
The petrochemical segment continues to face pricing pressure and elevated feedstock costs. CLSA flagged this as a short-term margin headwind, though it acknowledged that cyclical improvements and capacity additions could eventually revive performance.
Despite this weak spot, the brokerage believes GAIL’s diversified business model and improving visibility in core gas transmission and marketing make it an attractive play in India’s energy infrastructure space.
Disclaimer: This article is based on the brokerage report by CLSA. It does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
