GAIL India - Fueled By Gas: HDFC Securities

HDFC Securities Institutional Equities

Our Buy recommendation for GAIL India Ltd. with a target price of Rs 260 is based on-

1. an increase in gas transmission volume to 144 million metric standard cubic metre per day by FY26E (two-year CAGR of 9%), supported by completion of major pipelines in eastern and southern India and stabilising LNG prices,

2. continued robust profitability in the gas trading segment, and

3. expectation of improvement in earnings from the petchem segment.

At the current price, GAIL is trading at 11.6 times Mar-26E EPS, only 1% premium to its five-year average despite the stronger volume growth outlook in its core business of gas transmission.

Adjusting for the value of its investments, we estimate the GAIL stock is trading at an inexpensive 8.8X FY26E earnings.

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