Petronet LNG, Gail, IGL, MGL shares: Good 'US-Iran war over' news coming soon? What to do with gas stocks

With the US President Donald trump signalling the Iran war is "very close to over", all eyes are on how investors should play the gas theme, which came to spotlight last month, following supply disruptions in the Strait of Hormuz.   

Elara Securities, which analysed gas stocks such as Gail India, Petronet LNG Ltd, Gujarat State Petronet Ltd (GSPL), Gujarat Gas Ltd, Indraprastha Gas and Mahanagar Gas Ltd, on possible plays on potential post-war normalisation, said one must expect stock-specific actions going ahead. 

The domestic brokerage said except for IGL, most stocks currently imply crude oil levels of $85–89 barrel. This, it said, suggested much of war normalisation premium is already priced in. Hence, it believes any de-escalation driven rallies look largely played out. 

"Hereafter, upside will hinge on macro relief and more on company-specific catalysts: earnings recovery, volume visibility, policy drivers, and liquified natural gas (LNG) vs liquified petroleum gas (LPG) supply dynamics, rather than event-led rerating," it said.

After updating its framework with key developments from the past one-and-a-half months, the brokerage expects outperformance from MGL and Petronet LNG, underperformance from Gujarat Gas & GSPL, and market-aligned returns from GAIL and IGL. 

"MGL stands out as the most attractive play, with its recent correction outpacing its limited Hormuz exposure – currently offering robust volume visibility at a 10 per cent CAGR. PLNG should rebound on strong contracted LNG volume in India, enabling post-war India imports comparable to CY25 imports of ~26mn tonne. This ensures earnings stability amid global tightness," Elara said.

Elara said GAIL and IGL have staged meaningful recoveries during the war. They currently trade at a modest 5–9 per cent discount to pre-war levels. Fundamentals for the two stocks remain stable, but near-term upside looks capped, Elara said.

Meanwhile, delayed recovery in industrial gas demand will weigh on Gujarat Gas and GSPL, stemming from unfavorable LNG vs LPG economics. 

"Global LNG supply expected to normalise slower than LPG, with ~13mn tonne (20 per cent of uncontracted LNG supply) from Qatar’s supply needing more than three years to ramp up," Elara said.