'Buy' GAIL India Shares Maintains Motilal Oswal On Compelling Valuations — Check Target Price

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Motilal Oswal Report

We reiterate Buy on GAIL India Ltd. with our SoTP-based target price of Rs 220. Over FY26-28, we estimate an 11% CAGR in PAT, driven by:

1. an increase in natural gas transmission volumes to 132 million metric standard cubic metre per day in FY28 from 123mmscmd in FY26;

2. substantial improvement in the petchem segment’s performance over FY27-28, as new petchem capacity becomes operational and spreads bottom out;

3. healthy profitability in the trading segment, with guided Ebit of at least Rs 40 billion in FY26/FY27.

We expect RoE to stabilize at ~13% in FY27/28, with a healthy free-cash-flow generation of Rs 171.4 billion over FY26-28 (vs -Rs 45.3 billion in FY23), which we believe can support its valuations.

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