GAIL (India) Ltd. shares gained over 5% on Monday, rising to ₹169 despite reporting weak Q4 earnings. According to reports from Moneycontrol, the stock climbed 5.1 percent in morning trade after brokerages retained bullish views on the company. Among the 33 analysts covering the stock, 26 have a 'buy' rating, six have a 'hold' rating, and one has a 'sell' rating. Brokerage firm Jefferies maintains a 'buy' recommendation with a price target of ₹180 per share, indicating an upside of 11.9% from Friday's closing levels, while Prabhudas Lilladher raised its target price to ₹190 from ₹170 earlier.
GAIL's fourth quarter earnings before interest, tax, depreciation, and amortization (EBITDA) was a sharp miss compared to brokerage and consensus estimates, according to Moneycontrol. The company's standalone net profit for Q4 fell 38.4% year-on-year and 21.2% sequentially to ₹1,260 crore. EBITDA dropped sharply to ₹1,150 crore, down 64.2% from a year earlier and 56.6% from the previous quarter. The weakness was primarily attributed to weakness in gas trading and transmission businesses as well as continued losses in petrochemicals. Despite these challenges, Jefferies has maintained its positive outlook on the company's long-term prospects.
Investor sentiment was positive on hopes for improved gas supplies if tensions in West Asia ease and the Strait of Hormuz reopens fully, as reported by Moneycontrol. The optimism came alongside a sharp decline in crude oil prices amid reports of progress in US-Iran negotiations. The Strait of Hormuz is a critical route for global oil and LNG shipments, and improved energy flows would be positive for India's gas sector. Management has guided for transmission volumes of 115 mmscmd under a prolonged West Asia disruption scenario, and 119 mmscmd if supply conditions normalise by mid-July. In gas trading, GAIL expects profit before tax of about ₹4,000 crore if disruptions persist, rising to around ₹4,500 crore should supplies normalise during the second quarter of FY27.
Jefferies has raised its earnings per share (EPS) estimates for GAIL for financial years 2027 and 2028, despite acknowledging a 'lost opportunity' from power sector demand this summer due to the West Asia crisis. As reported by Moneycontrol, the brokerage has raised its estimated EPS for FY27 by 20% and for FY28 by 29% on a sharp reduction in depreciation rate. However, Jefferies has lowered GAIL's EBITDA estimates by 8% for FY27 and left its expectations for FY28 broadly unchanged. The firm's optimism remains pinned on hopes for a quick resolution to the conflict.
Brokerages said the market appears to be looking beyond the weak quarterly earnings and focusing on medium-term volume recovery, according to Moneycontrol. Any reopening of energy trade routes and restoration of LNG supplies could improve gas availability, support transmission volumes and strengthen profitability in GAIL's core gas marketing and pipeline businesses. The stock's rally also coincided with a broad risk-on move across Indian equities, with energy-linked shares gaining after Brent crude prices fell sharply on hopes of easing geopolitical tensions in the Gulf region.
