Shares of GAIL (India) Ltd declined over 5% on Friday, Nov 28, after the Petroleum and Natural Gas Regulatory Board (PNGRB) released its long-awaited transmission tariff revision late on Thursday. The stock slipped to around ₹174, reacting sharply to the tariff structure that came in below market expectations.
The PNGRB announced a new transmission tariff of ₹65.7 per MMBtu, compared to the earlier ₹58.6 per MMBtu, marking a 12% increase. While positive on paper, the revision is significantly lower than what both the company and analysts were expecting. GAIL had sought a tariff of ₹78 per MMBtu, while the markets were factoring in a nearly 20% hike.
The regulator also said that key adjustments — including actual and future capex, operating costs, transmission losses, working days, and revenue-sharing changes — would be reviewed only in the next tariff revision in FY28, applicable from April 1, 2028.
Brokerage commentary reflected the disappointment. ICICI Securities noted that a 12% hike versus its estimated 20% increase implies a 2.5% to 4.7% impact on GAIL’s EPS for FY27 and FY28. The firm, however, maintained its “Buy” call with a target price of ₹215, highlighting that the deferred FY28 review leaves room for an upside later.
In an interaction with CNBC-TV18, GAIL’s management said the tariff hike would add ₹1,200 crore to transmission EBITDA this year and around ₹1,350 crore next year. Director of Finance Rajesh Kumar Jain added that the gap between the company’s expectation and the order is nearly ₹5, and the firm may seek a review.
Brokerage UBS also termed the hike “disappointing,” noting that the realized increase may be even lower. The firm added that the regulator’s decision to defer adjustments was aimed at avoiding a steep immediate tariff burden on customers.
The combination of a lower-than-expected revision, delayed adjustments, and earnings impact concerns weighed on investor sentiment, leading to today’s decline in GAIL shares.
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