While GAIL (India) Ltd.'s net standalone profit fell in the quarter ended March due to a high-base effect, brokerages remain upbeat on the state-owned energy corporation, as earnings showed resilience despite global gas price volatility.
Morgan Stanley holds an 'overweight' call on the company, with Citi and Investec reiterating their 'buy' recommendations. GAIL's core earnings were in line with the bullish estimate and beat street consensus, said Morgan Stanley in its latest note, with Investec and Citi echoing the sentiment.
GAIL stands to benefit from the export of US shale gas and India's deeper gas penetration, according to Morgan Stanley. Despite only a 2% annual dip in fourth-quarter volumes, GAIL managed to weather high global prices, it added.
The firm forecasts a 10% upside to street fiscal 2026 estimates, driven by new LNG sourcing contracts, tailwinds from regulatory reforms, and expansion in petrochemical investments as gas costs fall.
Investec noted a strong Ebit beat of Rs 2,880 crore, marking 18% above its estimate, largely led by gas marketing and LPG segments. Profit after tax for the fiscal jumped 29% yearly, bolstered by a one-off settlement. Even excluding this, adjusted profit after tax was up 8% on an annual basis at Rs 9,500 crore, they noted.
Petchem Ebit remained weak, hurt by low plant utilisation and subdued pricing, added the brokerage.
Meanwhile, Citi sees a compelling narrative forming around India's rising LNG imports and GAIL's push to lock in low-cost US LNG contracts. The worst of Ebit volatility may be behind, with the current fiscal looking structurally stronger thanks to better volumes, petchem recovery, and incremental LNG pipeline investments, it said.
GAIL Q4 FY25 Highlights (Standalone, QoQ)
Revenue up 2% to Rs 35,685 crore versus Rs 34,937 crore (Bloomberg estimate: Rs 35,747 crore).
Ebitda up 13.3% to Rs 3,216 crore versus Rs 2,838 crore (Bloomberg estimate: Rs 3,052.0 crore).
Margin expands to 9% versus 8.1% (Bloomberg estimate: 8.5%).
Net profit down 47% to Rs 2,049 crore versus Rs 3,867 crore (Bloomberg estimate: Rs 2,035 crore).
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