GAIL India - Nirmal Bang Retain's Accumulate As Growth Priced In

Nirmal Bang Report

Rating Rationale

Healthy gas demand growth, supported by infrastructure expansion and policy support. GAIL India Ltd. as a market leader will be a key beneficiary.

GAIL’s new integrated tariff offers upside in gas transmission earnings as the unified tariff proposal is positive for long-term volume expansion in the Indian gas market.

GAIL is leader in gas transmission and gas marketing – GAIL has 74% market share in gas transmission and 60% market share in gas marketing. Therefore, GAIL is likely to benefit from the resultant growth in gas transmission and gas trading segments’ volume, which could boost earnings from these segments. This is a potential upside in GAIL’s earnings.

Return ratios from gas transmission business are likely to improve in the long term towards the normal post-tax return of 12%, which the regulator has built into the approved tariff for GAIL’s pipelines.

This is likely to be driven by transmission capacity utilisation improving from past average of 52-53% to 60% by FY26-end and towards the 75% norm used by the PNGRB to fix tariff.

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