GAIL share price: Oil & gas analysts trim targets post PNGRB’s interim tariff hike
JM reiterated a 'Buy' rating on GAIL, expecting around 5 per cent CAGR in natural gas transmission volumes in the medium to long term, supported by India’s efforts to increase the share of gas in the energy mix.
- Dec 1, 2025,
- Updated Dec 1, 2025 12:52 PM IST
Stock anlaysts tracking oil & gas sectors noted that the PNGRB has approved a 12 per cent interim tariff hike for GAIL’s integrated natural gas pipeline system, raising the tariff to Rs 65.70 per mmBtu from 1 January 2026, compared with the current Rs 58.60 per mmbtu. The increase reflected allowances for a higher cost of system-use gas (SUG) and a higher approved capacity/volume divisor. However, the hike was below expectations of an increase of about 18 per cent (Rs 69–70 per mmbtu), as the regulator deferred consideration of higher capex, higher opex (excluding SUG) and transmission losses to avoid placing unexpected financial pressure on customers. PNGRB indicated that these elements would be assessed in the next tariff review in FY28, with revised tariffs applicable from 1 April 2028.
A couple of brokerages have cut their earnings growth projections on GAL, even as they suggested 'Buy' on the stock.
"We cut FY27/28F Ebitda by 7 per cent/6 per cent each to adjust for the lower-than-expected transmission tariffs and low realisations for the LPG production business. Consequently, our SOTP-based target price is cut to Rs 214 from Rs 223. We maintain our Buy rating on GAIL as FY27F EV/Ebitda at 7.3 times seems attractive for FY27/28F Ebitda growth of 16 per cent/9 per cent," Nomura India said.
JM Financial cut its FY27-FY28 PAT estimates on the PSU by 3-4.5 per cent and reduced its target price by around 4 per cent to Rs 205 from Rs 215 earlier, reflecting the lower-than-expected tariff increase. It added that the final tariff reset from April 2028 could partly offset the long-term earnings and valuation impact.
This is even as another brokerage MOFSL upped its target on the stock. MOFSL said GAIL’s valuations have corrected sharply from their September 2024 highs, and the stock now trades close to its historical average at 1.1 times one-year forward core P/B, offering limited downside, considering an attractive dividend yield and a robust FCF outlook.
"Further, the transmission tariff revision, effective from Jan’26, would raise the FY27E PAT by around 7%. Transmission volumes are also set to rebound in FY27 as the impact of multiple one-off disruptions in FY26 wanes, with a recovery in power and fertilizer offtake and normalization of flood-impacted supplies. Government initiatives to further rationalize natural gas taxation can be a significant long-term positive. Reiterate BUY with a target of Rs 220," it said.
JM Financial, on the other hand, said near-term earnings growth is likely to remain muted as elevated spot LNG prices continued to weigh on natural gas transmission volumes. Spot LNG prices were at 17-18 per cent of Brent, higher than the long-term average of around 12 per cent. However, the brokerage viewed the medium- to long-term outlook as supportive, expecting spot LNG prices to ease as 40-50 per cent additional global LNG supply comes onstream over the next three to four years starting end-CY26.
It reiterated a 'Buy' rating on GAIL, expecting around 5 per cent CAGR in natural gas transmission volumes in the medium to long term, supported by India’s efforts to increase the share of gas in the energy mix to 15 per cent by 2030 from about 7 per cent currently. The brokerage also said gas-trading profitability was likely to remain robust, aided by relatively firm spot LNG and oil-linked realisations, while US Henry Hub gas prices were expected to stay moderate given strong domestic output growth.
At the current market price, JM Financial said GAIL traded at 1.1 times consolidated FY28E P/B, compared with a three-year average of 1.2 times, and at 9.8 times consolidated FY28E P/E, versus a three-year average of 10.2 times.
Stock anlaysts tracking oil & gas sectors noted that the PNGRB has approved a 12 per cent interim tariff hike for GAIL’s integrated natural gas pipeline system, raising the tariff to Rs 65.70 per mmBtu from 1 January 2026, compared with the current Rs 58.60 per mmbtu. The increase reflected allowances for a higher cost of system-use gas (SUG) and a higher approved capacity/volume divisor. However, the hike was below expectations of an increase of about 18 per cent (Rs 69–70 per mmbtu), as the regulator deferred consideration of higher capex, higher opex (excluding SUG) and transmission losses to avoid placing unexpected financial pressure on customers. PNGRB indicated that these elements would be assessed in the next tariff review in FY28, with revised tariffs applicable from 1 April 2028.
A couple of brokerages have cut their earnings growth projections on GAL, even as they suggested 'Buy' on the stock.
"We cut FY27/28F Ebitda by 7 per cent/6 per cent each to adjust for the lower-than-expected transmission tariffs and low realisations for the LPG production business. Consequently, our SOTP-based target price is cut to Rs 214 from Rs 223. We maintain our Buy rating on GAIL as FY27F EV/Ebitda at 7.3 times seems attractive for FY27/28F Ebitda growth of 16 per cent/9 per cent," Nomura India said.
JM Financial cut its FY27-FY28 PAT estimates on the PSU by 3-4.5 per cent and reduced its target price by around 4 per cent to Rs 205 from Rs 215 earlier, reflecting the lower-than-expected tariff increase. It added that the final tariff reset from April 2028 could partly offset the long-term earnings and valuation impact.
This is even as another brokerage MOFSL upped its target on the stock. MOFSL said GAIL’s valuations have corrected sharply from their September 2024 highs, and the stock now trades close to its historical average at 1.1 times one-year forward core P/B, offering limited downside, considering an attractive dividend yield and a robust FCF outlook.
"Further, the transmission tariff revision, effective from Jan’26, would raise the FY27E PAT by around 7%. Transmission volumes are also set to rebound in FY27 as the impact of multiple one-off disruptions in FY26 wanes, with a recovery in power and fertilizer offtake and normalization of flood-impacted supplies. Government initiatives to further rationalize natural gas taxation can be a significant long-term positive. Reiterate BUY with a target of Rs 220," it said.
JM Financial, on the other hand, said near-term earnings growth is likely to remain muted as elevated spot LNG prices continued to weigh on natural gas transmission volumes. Spot LNG prices were at 17-18 per cent of Brent, higher than the long-term average of around 12 per cent. However, the brokerage viewed the medium- to long-term outlook as supportive, expecting spot LNG prices to ease as 40-50 per cent additional global LNG supply comes onstream over the next three to four years starting end-CY26.
It reiterated a 'Buy' rating on GAIL, expecting around 5 per cent CAGR in natural gas transmission volumes in the medium to long term, supported by India’s efforts to increase the share of gas in the energy mix to 15 per cent by 2030 from about 7 per cent currently. The brokerage also said gas-trading profitability was likely to remain robust, aided by relatively firm spot LNG and oil-linked realisations, while US Henry Hub gas prices were expected to stay moderate given strong domestic output growth.
At the current market price, JM Financial said GAIL traded at 1.1 times consolidated FY28E P/B, compared with a three-year average of 1.2 times, and at 9.8 times consolidated FY28E P/E, versus a three-year average of 10.2 times.