GAIL (India) shares witnessed a 7% surge in early trade on Friday following a 28% increase in consolidated net profit for the quarter ending December 2024, reaching ₹4,084.24 crore compared to ₹3,193.34 crore in the same period the previous year.
Closing at ₹177.20 on the NSE, the stock ended 6.04% higher after reaching a high of ₹178.87.
Analysts had differing opinions, with most maintaining buy ratings due to the company’s steady overall prospects. However, some raised concerns regarding marketing volatility and an earnings miss.
Motilal Oswal highlighted that the Q3 performance fell below expectations, mainly due to a weak performance in the gas marketing segment. The brokerage noted that transmission volumes were impacted by a decrease in power sector demand, and lower profitability resulted from adverse spread movements on some gas contracts.
On the other hand, ICICI Securities expressed confidence in the company’s steady prospects, expecting sustained performance in the coming years. Factors such as growing domestic gas supplies, LNG liquefaction capacity, and the normalization of LPG prices were considered positive.
Both Motilal Oswal and ICICI Securities reiterated a buy rating with a target price of ₹255.
Elara Capital analysts lowered GAIL’s target price from ₹263 to ₹234, citing lower gas marketing margins and subdued earnings from the LPG & Liquid Hydrocarbons segments. Despite this, they anticipated robust growth in gas transmission volumes due to pipeline connectivity with new regions and increasing CGD demand.
Emkay Global reiterated a buy rating with a target price of ₹220, citing attractive valuation and upcoming pipeline tariff triggers. Key risks identified by the analysts included adverse commodity prices and margins, currency fluctuations, regulations, outages, and project delays.
Nomura, maintaining a buy rating with a target price of ₹240, noted that the results missed estimates due to lower gas marketing and petrochemical profitability.
Conversely, Nuvama Institutional Equities downgraded the stock to ‘reduce’ with a target price of ₹159, citing volatile marketing earnings as the primary reason. The brokerage highlighted ongoing volatility in the natural gas marketing earnings.
Overall, while analysts had varying opinions on GAIL’s performance, the company’s prospects and challenges were carefully analyzed and discussed.
