GAIL India shares tumble 5% despite Q1 net profit doubling to Rs 4,665 crore. Buy, sell or hold?
The shares of GAIL India tumbled 5% on Monday even after the Maharatna PSU reported a consolidated net profit of Rs 4,665 crore for the
The shares of GAIL India tumbled 5% on Monday even after the Maharatna PSU reported a consolidated net profit of Rs 4,665 crore for the first quarter of FY27, nearly doubling from Rs 2,369 crore reported in the same period last year.Sequentially, the surge in profit was even sharper, rising more than 214% quarter-on-quarter (QoQ) from the Rs 1,485 crore reported in the January-March quarter of FY26. The company's shares tumbled to Rs 172.71 apiece on Monday morning.The gas company’s revenue from operations rose nearly 17% year-on-year (YoY) to Rs 41,350 crore in Q1 FY27, from Rs 35,429 crore reported in the corresponding quarter of FY26. EBITDA stood at Rs 7,573 crore, versus Rs 2,703 crore in the previous quarter.During Q1 of FY27, the company recorded a capex of Rs 6,176 crore, as against the annual planned capex of around Rs 11,500 crore, in line with its long-term growth strategy.
“The sequential increase in natural gas transmission and LHC production underscores the strength of GAIL’s core infrastructure and liquid hydrocarbon operations, while lower gas marketing and polymer volumes reflect the impact of external disruptions during the quarter,” it added.JM Financial on GAIL share priceJM Financial said GAIL’s EBITDA was significantly higher than estimated, led by substantially higher gas trading EBITDA. That said, this was largely a one-off driven by high margin in JCC crude-linked LNG and extra margin earned in 20–25% open-ended US HH volume, the brokerage noted. However, earnings beat was also aided by better EBITDA in the gas transmission segment, LPG, OHC and petchem segment, it further said, adding that LPG pipeline segment’s EBITDA was slightly lower. During the conference call, JM Financial noted that GAIL India's management reiterated gas trading PBT guidance of Rs 45 billion for FY27, while guiding for FY27 gas transmission volume at 123 mmscmd assuming the Middle East tensions continue.
All in all, the brokerage raised FY27–29 EBITDA estimates by 3–4%, factoring in Q1 FY27 results and management guidance.“Furthermore, gas trading profitability is likely to remain robust for GAIL over the medium term given high spot LNG prices and oil-linked prices, while US HH gas price outlook shall stay moderate given expectations of strong growth in the US domestic gas output,” it added. Also read | High dividend yield stocks: Vedanta, Coal India among 15 largecap stocks with high dividend yields. Do you own any?JM Financial reiterated its ‘Buy’ call on the shares of GAIL India, and raised its target price to Rs 210 apiece, implying nearly 16% upside potential from the stock’s previous closing price.GAIL share priceGAIL India shares have gained more than 1% YTD, but have recorded marginal losses in a week, month and a year.In the longer term, the stock has delivered 50% returns over three years and 82% returns over five years.Also read | Why is the market rising today?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.
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