GAIL Q2 Review— Tariff Hikes, Volume Uplift Key Catalysts In H2 FY26-27; Motilal Oswal Maintains 'Buy'

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Motilal Oswal Report

GAIL India Ltd.’s valuations have corrected sharply from their Sep’24 highs, and the stock now trades close to its historical averages at ~1.1x one-year forward core P/B (ex-investment value), offering limited downside driven by attractive dividend yield and robust FCF outlook.

Further, the anticipated transmission tariff revision effective from Jan’26 is likely to raise the FY27E PAT by ~11% (revised target price: Rs 228), serving as a key near-term catalyst. Reiterate Buy with a target price of Rs 205.

GAIL’s standalone Ebitda came in 5% above our estimate at Rs 31.9 billion. While gas transmission Ebit missed our estimate by 6%, the marketing segment posted a strong performance, and H1 FY26 Ebit now forms ~50% of the guidance of Rs 45 billion. Petchem sales were above our estimate at 209 tmt, while the petchem segment reported an Ebit loss of Rs 3 billion.

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