Buy GAIL India; target of Rs 206: Prabhudas Lilladher

What happened

Prabhudas Lilladher maintained a Buy rating on GAIL India and set a target price of Rs 206. GAIL's EBITDA and profit after tax beat estimates, helped by transmission profitability, resilient trading and a petrochemical turnaround.

Confirmed

Global impact / market context

A Buy rating with a higher target price implies the broker sees more upside in GAIL shares. The view rests on steady gas transmission profit and a petrochemical turnaround, which supports earnings used to justify the target.

Analyst inference

GAIL guides transmission volumes up to 126-127mmscmd in FY27 and 134-135mmscmd in FY28, which means million metric standard cubic metres per day of gas moved. Higher volumes lift transmission revenue, while management expects marketing profit to normalise.

Analyst inference

What to watch

1. Management guides FY27 transmission volumes at 126-127mmscmd, rising to 134-135mmscmd in FY28, supported by recovering gas consumption in power, fertilizer and petrochemical sectors. Confirmed
2. GAIL expects elevated H1FY27 trading gains to fade in H2FY27, with FY28 marketing profit before tax normalising to INR40-45bn from the raised FY27 range. Confirmed
3. Watch whether petrochemical operations hold breakeven in FY27 as guided, because a return to losses would reduce the earnings base behind the Rs 206 target price. Analyst inference

Evidence

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