Shares of GAIL (India) soared 7 per cent in early trade on Friday post recording a 28 per cent increase in consolidated net profit for the quarter ended December 2024 at ₹4,084.24 crore as against ₹3,193.34 crore in the corresponding quarter previous year.
The stock closed 6.04 per cent positive on the NSE at ₹177.20, after hitting a high of ₹178.87.
Analysts were divided, a majority having retained buy ratings due to steady overall prospects of the company, while some have flagged concerns over marketing volatility and earnings miss.
Motilal Oswal emphasised that the Q3 performance was significantly below estimates, primarily due to weak gas marketing segment performance.
The brokerage added that the transmission volumes were weaker due to a decline in power sector demand in the quarter, while adverse spread movement on some of the gas contracts led to lower profitability on some of the marketing contracts.
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ICICI Securities believed that the prospects remain steady for the company which should drive a period of sustained performance over the next couple of years. “Growing domestic gas supplies, LNG liquefaction capacity and the expectation of relatively moderate pricing of the same along with the normalisation of LPG prices are all positives,” it added.
Both brokerages have reiterated buy call at the target price of ₹255.
Elara Capital analysts have slashed the target price on GAIL from ₹263 to ₹234, to factor-in lower gas marketing margin and subdued earnings from LPG & Liquid Hydrocarbons (LHC) segments. They foresee gas transmission volume to grow at a robust pace, due to pipeline connectivity with new regions, rising CGD demand and strong growth plans of ONGC and Oil India as regards production.
Analysts of Emkay Global have retained buy at a target price of ₹220 based on attractive valuation and upcoming pipeline tariff triggers. They have also indicated key risks such as adverse commodity price and margins, currency fluctuations, regulations, outages, and project delays.
Nomura, maintaining buy at a target price of ₹240, stated that the results sharply missed estimates due to lower gas marketing and petchem profitability.
On the other hand, Nuvama Institutional Equities has downgraded the stock to ‘reduce’ at a target price of ₹159, reasoning the volatile marketing earnings. The brokerage continues to observe volatility in the natural gas marketing earnings.