Morgan Stanley has reiterated its ‘Overweight’ rating on GAIL (India) Ltd with a raised conviction in its long-term structural story, maintaining a target price of ₹248. The brokerage believes GAIL remains a major beneficiary of the accelerating natural gas adoption in India, supported by robust infrastructure development and favorable regulatory shifts.
In Q4FY25, GAIL posted revenue of ₹35,685 crore, a 2.1% increase over ₹34,937 crore in Q3FY25. EBITDA rose 13.3% sequentially to ₹3,215 crore, with margins expanding to 9.01% from 8.10%. However, net profit declined sharply to ₹2,049 crore from ₹3,867 crore in the previous quarter, a fall of 47%, due to a high base and non-operational charges.
Earnings reinforce growth narrative despite price shocks
Morgan Stanley noted that Q4 results further strengthen the structural growth thesis for GAIL. Despite elevated global natural gas prices in the quarter, volumes declined only 2% YoY — a sign that India’s gas demand is becoming less sensitive to price fluctuations, a significant shift from previous cycles.
The brokerage added that gas marketing provided critical support to earnings, even amid higher US Henry Hub prices. The resilience of marketing margins during a volatile pricing environment was viewed as a positive for GAIL’s earnings quality and valuation multiple.
Upcoming infrastructure to drive upside potential
Morgan Stanley highlighted the commissioning of four new pipelines, fresh LNG sourcing contracts, and emerging regulatory tailwinds as key factors likely to contribute to a 10% upside versus Street estimates for FY26. The firm sees these developments enabling stronger throughput and boosting returns in both transmission and trading businesses.
The report also pointed to petrochemical investments as a potential outperformer in the coming years. With lower gas input costs expected and new capacity additions underway, Morgan Stanley believes EBIT volatility in this segment will ease in FY26.
Valuation anchored in long-term energy transformation
Positioning GAIL as a critical lever in India’s shift to cleaner fuels, Morgan Stanley argues that the market is yet to fully price in the company’s operating leverage and scale benefits as natural gas penetration expands across industries, mobility, and city gas distribution.
“India is experiencing a gas-led industrial shift, and GAIL sits at the heart of this transition,” the brokerage noted, signaling confidence in both near-term execution and long-term strategy.
Disclaimer: This article is based on the brokerage report by Morgan Stanley. It does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
