GAIL Shares Dip 2% After Q4 Earnings Miss; Mixed Brokerages Outlook

GAIL Reports Weaker-Than-Expected Q4FY25 Earnings Amid Revenue Growth

Shares of GAIL (India) Limited slipped nearly 2% to Rs 182 per share on May 15 following the company’s March quarter (Q4FY25) earnings announcement, which fell short of market expectations. GAIL posted a standalone net profit of Rs 2,049 crore for the quarter, reflecting a 5.87% decline from Rs 2,177 crore in the same quarter last fiscal year. Despite the profit dip, the company’s revenue from operations rose 10.4% year-on-year to Rs 35,707 crore from Rs 32,334 crore in Q4FY24.

The gas transmission and distribution major reported an EBITDA of Rs 3,215 crore for the quarter, marking a 13% year-on-year increase. EBITDA margins expanded slightly to 9% compared to 8.8% in Q4FY24, reflecting improved operational efficiency despite top-line pressures. However, transmission volumes declined to 121 million metric standard cubic meters per day (mmscmd) in Q4FY25 from 126 mmscmd in the year-ago period, highlighting volume challenges.

Highlights:

• GAIL Q4 standalone net profit fell 5.87% YoY to Rs 2,049 crore.

• Revenue grew 10.4% YoY to Rs 35,707 crore.

• EBITDA increased 13% YoY to Rs 3,215 crore; EBITDA margin expanded to 9%.

• Transmission volume declined to 121 mmscmd from 126 mmscmd YoY.

Brokerages Maintain Mostly Positive Stance Despite Near-Term Weakness

In response to the quarterly performance, brokerage houses largely retained bullish views on GAIL’s stock, emphasizing the potential for recovery in the upcoming fiscal year driven by improved volumes and better earnings stability. Motilal Oswal reaffirmed a ‘Buy’ rating on GAIL shares with a target price of Rs 212, projecting an 11% compound annual growth rate (CAGR) in profit after tax (PAT) and an improvement in return on equity (RoE) to around 13.8% in FY26.

Contrastingly, Prabhudas Lilladher Capital adopted a more cautious tone by downgrading GAIL from ‘Accumulate’ to ‘Hold’ while setting a target price of Rs 191. The brokerage values GAIL at 11 times its adjusted standalone earnings per share (EPS) for FY27, reflecting a tempered outlook amid valuation concerns.

Meanwhile, Emkay Global sustained its ‘Buy’ rating on the stock with an unchanged target of Rs 220. However, the firm trimmed its FY26-27 EPS estimates by 3-5%, indicating tempered near-term earnings growth expectations.

Highlights:

• Motilal Oswal maintains ‘Buy’ with Rs 212 target, citing 11% PAT CAGR.

• Prabhudas Lilladher downgrades to ‘Hold’, target price Rs 191, valuing stock at 11x FY27 adjusted EPS.

• Emkay Global retains ‘Buy’ rating but cuts FY26-27 EPS estimates by 3-5%.

Operational Challenges Weigh on Transmission Volumes

A key concern arising from the quarterly results is the fall in gas transmission volumes, which dropped to 121 mmscmd from 126 mmscmd year-on-year. This decline suggests continuing demand-side pressures or supply constraints impacting the core transmission business. While the rise in revenue and EBITDA reflects some operational resilience and improved margin management, the volume contraction signals the need for sustained recovery to bolster future earnings growth.

Brokerages expect that the worst of earnings volatility may be behind GAIL as volumes stabilize and pick up in FY26, supported by new contracts and increased demand in key sectors such as fertilisers, power, and petrochemicals.

Highlights:

• Transmission volumes fell by approximately 4% YoY to 121 mmscmd.

• Volume weakness presents a challenge to revenue growth sustainability.

• Expectations of volume recovery in FY26 could support earnings stability.

Valuation and Investment Considerations Amid Uncertainty

GAIL’s shares trade at valuations that have drawn mixed interpretations from analysts. While Motilal Oswal views the current price as attractive given the company’s growth trajectory and improving RoE, Prabhudas Lilladher cautions that valuation multiples may have limited upside near term. The stock’s reaction to Q4 results—down 2%—reflects investor hesitation as earnings growth faces headwinds from volume dips and global energy market volatility.

Investors weighing whether to buy, hold, or sell GAIL shares should consider the company’s strategic positioning as India’s leading gas transporter, its pipeline for volume growth, and the macroeconomic factors influencing gas demand. While brokerages maintain a cautiously optimistic outlook, near-term price action may remain volatile, necessitating a balanced approach aligned with one’s risk tolerance and investment horizon.

Highlights:

• Divergence in valuation views among brokerages affects market sentiment.

• GAIL’s leadership in gas transmission offers structural growth potential.

• Near-term volatility expected; tactical positioning advised for investors.