GAIL India share price extends rally for third session as brokerages raise target after Q4 results; Should you buy?

India’s largest natural gas company GAIL India reported a 260% jump in its net profit at ₹2,177 crore for the quarter ended March 2024 as against ₹603.5 crore in the same period last year. However, on a sequential basis, GAIL India Q4 net profit fell 23% from ₹2,842.62 crore.

The company’s total income in Q4FY24 fell 2.6% to ₹32,317 from ₹33,875.39 in the year-ago period. The total income declined 5.6% from ₹34,237 crore, QoQ.

Read here: GAIL Q4FY24 results: Net profit soars 260% YoY but falls 23% sequentially; total income declines

GAIL India’s Natural Gas transmission volume stood increased to 123.65 MMSCMD in Q4FY24 as against 121.54 MMSCMD in Q3FY24, while Gas marketing volume stood at 99.90 MMSCMD as compared with 98.14 MMSCMD in previous quarter. LHC sales increased 5% to 261 TMT from 249 TMT and Polymer sales jumped by 13% to 242 TMT from 215 TMT, QoQ.

GAIL anticipates a robust domestic gas demand, projecting gas transmission volumes to reach 132 MMSCMD by end-FY25 and 142 MMSCMD by end-FY26.

GAIL India share price has risen over 15% in the past three months, while the shares have gained over 28% year-to-date (YTD). In the past one year, GAIL shares have rallied more than 98% and over 114% in three years.

Also Read: Chandan Taparia recommendations: How to trade NMDC, IRFC, GAIL India shares today

Brokerages have maintained their bullish view and raised their target prices for GAIL India shares as the company has maintained robust guidance. Here’s what brokerages said on GAIL Q4 results and GAIL share price.

Motilal Oswal Financial Services

During FY24-26E, Motilal Oswal expects GAIL India PAT to report a 10% CAGR driven byrising natural gas transmission volumes to 142 MMSCMD in FY26 from 120 MMSCMD in FY24;  substantial improvement in petchem segment’s profitability over 2HFY25- FY26 as new petchem capacity will be operational and low inventories globally will drive re-stocking demand, thus improving spreads; and Healthy trading segment profitability.

It expects GAIL’s ROE to improve to ~15% in FY26 from 9.5% in FY23, with healthy FCF generation of ₹44 billion in FY26, which it believes can drive a re-rating for the stock.

Motilal Oswal reiterated its ‘Buy’ rating on GAIL India and raised the target price to ₹235 per share. 

Also Read: Multibagger stock IRFC share price in focus post Q4 results, dividend announcement

Emkay Global Financial Services

Emkay Global upgraded its rating on GAIL shares to ‘Add’ from ‘Reduce’, with over 50% revision in target price to ₹220 per share, as the company seems to be in a sweet spot. GAIL India stock, despite its strong run-up, has further positive triggers, it said. 

The brokerage lifts FY25-26E earnings per share (EPS) estimates by 28-35%, on higher gas transmission, marketing and petchem income. It increases target multiples for gas transmission and marketing by 1x each to 8x and 6x and for petchem by 0.5x to 6x..

Elara Capital

Elara Capital raised FY26E EPS estimates 3% due to higher gas transmission and marketing volume. It reiterated ‘Accumulate’ rating and raised GAIL India share price target to ₹227 per share from ₹191 earlier.

At 10:05 am, GAIL India shares were trading 0.24% higher at ₹209.25 apiece on the BSE. 

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 21 May 2024, 10:09 AM IST