GAIL India shares up 7% today; more upside ahead? Here is target price

GAIL (India) Ltd saw its shares rallying 7 per cent in Wednesday's trade even as the PSU missed earnings estimates due to normalisation of gas trading margin. JM Financial has maintained its 'Buy' rating on the stock with a revised target price of Rs 250 from Rs 255.

GAIL India shares rose 6.89 per cent to Rs 209.95 on BSE. At prevailing price, the stock trades at 1.6 times FY27 book value and 10.9 times FY27 EPS. The oil PSU has gained 25.53 per cent in 2024 so far.

"We reiterate Buy due to steady growth visibility in the gas transmission business, coupled with higher tariff, on account of various policy tailwinds (given the government’s target to increase the share of gas in India’s energy mix to 15 per cent by 2030 versus 7 per cent currently)," JM Financial said.

The brokerage said GAIL’s Q2 standalone Ebitda was lower at Rs 3,750 crore against the consensus estimate of Rs 4,030 crore primarily due to lower-than-expected Ebitda from the gas trading segment. It was also partly driven by slightly lower gas transmission Ebitda.

"Petchem segment Ebitda was largely in line as marginally lower sales volume was offset by robust margin. Further, LPG & OHC segment EBITDA was also largely in line with slightly higher sales volume offsetting marginally lower margin. LPG pipeline segment Ebitda was steady as expected," it said.

JM's revised target on GAIL India is based on steady growth visibility in the gas transmission business on account of higher tariff and various policy tailwinds (given the government’s target to increase the share of gas in India’s energy mix to 15 per cent by 2030 against 7 per cent currently).