GAIL Rises Despite Weak Q4 Numbers As Lower Crude Prices Lift Gas Sector Outlook

Shares of GAIL (India) gained strongly in early trade on May 25 after hopes of easing supply disruptions in the global energy market improved sentiment around the country’s gas sector.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The stock climbed 5.1% to ₹169 on the BSE even though the state-run gas company reported lower profitability and weaker operating performance for the March quarter.

Investor sentiment improved after crude oil prices declined sharply following reports of progress in discussions between the U.S. and Iran, raising expectations that traffic through the Strait of Hormuz could normalise in the coming weeks.

The Strait of Hormuz remains a key transit route for global crude oil and liquefied natural gas shipments. Any improvement in energy flows is expected to support India’s gas transmission and trading businesses, which have faced supply-related disruptions in recent months.

Profit And EBITDA Decline In Q4

GAIL reported a standalone net profit of ₹1,260 crore for the fourth quarter, down 38.4% year-on-year and 21.2% lower sequentially.

The company’s EBITDA declined sharply to ₹1,150 crore, registering a fall of 64.2% compared with the same period last year. Sequentially, EBITDA dropped 56.6%.

The decline was largely attributed to weakness in gas trading operations, lower transmission performance and continued pressure in the petrochemicals segment.

Lower depreciation expenses provided partial support to earnings during the quarter.

Transmission volumes also moderated during the period. According to brokerage estimates, transmission volumes stood at 119 million metric standard cubic metres per day (mmscmd) during the quarter compared with 125.5 mmscmd in the preceding quarter.

Jefferies maintained its “Buy” rating on GAIL with a target price of ₹180 per share. The brokerage reduced its FY27 EBITDA estimate by 8% following the weak quarter but kept FY28 projections broadly unchanged.

The brokerage also revised upward its earnings-per-share estimates for FY27 and FY28 after accounting for lower depreciation rates.

Prabhudas Lilladher reiterated its “Buy” recommendation and raised its target price to ₹190 from ₹170 earlier. The brokerage noted that underlying transmission volumes had remained relatively stable during January and February before disruptions affected average flows.

Management has projected transmission volumes of 115 mmscmd under a prolonged disruption scenario in West Asia and around 119 mmscmd if supply conditions improve by mid-July.

GAIL also expects profit before tax from its gas trading business to improve if LNG availability normalises during the second quarter of FY27.

The stock’s gains also tracked broader strength across energy-linked shares as falling crude oil prices supported overall market sentiment.