UBS has raised its target price on GAIL (India) to ₹215 per share from ₹205, while retaining its 'Buy' rating on the stock. According to reports from CNBC TV18, the revised price target implies an upside potential of 25% from the stock's closing price on Monday. The brokerage's optimism is reinforced by GAIL's impressive Q1FY27 results, with adjusted EBITDA doubling year-on-year and adjusted net profit surging 140% Y-o-Y. As per Business Standard, the strong performance reflects healthy Q1 trends while highlighting volatile geopolitics and price-sensitive domestic demand.
GAIL's transmission segment delivered robust performance with transmission volumes reaching 122.4 mmscmd in Q1, representing a 3% quarter-on-quarter increase. The company has raised its FY27 guidance to 123 mmscmd from an earlier 119 mmscmd, indicating strong momentum in the gas transmission business. UBS expects GAIL's transmission business to contribute 45% of standalone EBITDA in FY27 and 52% in FY28. The 1,707 km Mumbai-Nagpur-Jharsaguda Natural Gas Pipeline (MNJPL) became fully operational in Q1, with Jharsuguda demand at 0.5 mmscmd, further strengthening the transmission network. According to Emkay Global Financial, GAIL's transmission volumes should improve quarter-on-quarter and may exceed the FY27 guidance of 123 mmscmd.
The petrochemical segment showed significant improvement with EBITDA loss dropping to ₹11 crore from ₹390 crore quarter-on-quarter, while the PATA petchem complex is now operating at 100% utilisation and petrochem is projected to reach breakeven in FY27. The LPG & LHC business demonstrated exceptional growth with revenue surging 93% year-on-year to ₹2,040 crore and segment EBITDA rising 242.7% Y-o-Y to ₹800 crore. According to Business Standard, the LPG transmission EBITDA rose 67% Q-o-Q to ₹140 crore, benefiting from better realisations and operational improvements. Emkay Global Financial expects the petrochem segment to report better EBITDA quarter-on-quarter with plant utilization expected at near-100% capacity.
GAIL has set ambitious targets for LNG sourcing, aiming for additional 7-8 million metric tonnes per annum (mmtpa) LNG sourcing by 2030, with 2.5 mmtpa already tied up. The company's FY27 capex guidance stands at ₹11,500 crore, with ambient heating facilities at Dabhol LNG terminal expected to be completed by June 2027. The proposed GAIL Gas listing is expected to unlock additional value beyond the core operations. Assuming normalisation of geopolitics, 20% annual growth in EBITDA and net profit is possible through till FY28, with valuations including around ₹35-40 for subsidiary holdings. Emkay Global Financial notes that GAIL Gas's IPO RFP has already been released and a potential listing next year can lead to value unlocking of its wide CGD interest.
According to Bloomberg data reported by CNBC TV18, 21 of 32 analysts covering GAIL have a 'Buy' rating on the PSU stock, while nine have a 'Hold' rating and two have a 'Sell' rating. The 12-month consensus target price stands at ₹195.23, implying around 13% upside from Monday's closing price of ₹172.61. UBS' ₹215 target is the highest among tracked analysts, matching targets of ICICI Securities and Kotak Securities. Emkay Global Financial has upgraded GAIL to 'Buy' from 'Add' on the back of steady core business and earnings outlook along with attractive valuations. The stock has risen more than 27% over the last six months, while declining nearly 5% over the last 12 months.
