By GAIL India’s shares made a notable leap on Wednesday, surging over 5% in early trading to hit a 52-week high of ₹246.35 on the BSE. This surge comes on the heels of the company’s impressive first-quarter results for FY25, which surpassed market expectations and highlighted the firm’s strong financial performance.
The company, India’s largest gas distributor, reported a consolidated net profit of ₹3,183.35 crore for the first quarter, marking a significant 77.5% increase from ₹1,792.99 crore in the corresponding quarter of the previous year.
This growth was primarily driven by increased gas transmission volumes, higher domestic natural gas marketing, and improved margins in the natural gas marketing segment. The sequential growth in net profit was equally impressive, rising 28.6% from the previous quarter, further cementing GAIL’s position as a robust player in the energy sector.
Revenue from operations in Q1 FY25 also saw a slight uptick, reaching ₹34,821.89 crore, compared to ₹32,848.78 crore in the same quarter last year. While the revenue growth was modest, the company’s ability to significantly boost its profitability despite only a marginal increase in revenue is a testament to its operational efficiency and strategic focus on high-margin segments.
Sandeep Kumar Gupta, the Chairman and Managing Director of GAIL, attributed this performance to the company’s strategic investments and operational excellence.
He noted that GAIL had incurred a capital expenditure of approximately ₹1,659 crore during the quarter, with significant investments in pipelines, petrochemicals, and equity contributions to joint ventures. This capex represents about 21% of the company’s annual target of ₹8,044 crore, indicating a strong commitment to expanding its infrastructure and capacity to meet growing demand.
GAIL’s performance in its core segments was particularly strong. The company’s EBIT from the natural gas transmission segment rose 47.3% to ₹1,446.87 crore from ₹982.45 crore in the March quarter.
On a year-over-year basis, the growth in this segment was 40%, up from ₹1,028.33 crore. The natural gas marketing segment also saw significant gains, with EBIT jumping to ₹2,036.13 crore from ₹1,507.65 crore in the previous quarter.
However, the company’s petrochemical segment faced challenges, reporting an EBIT loss of ₹49.31 crore, compared to a profit of ₹533.41 crore in the previous quarter and a loss of ₹301.75 crore year-over-year.
This strong performance has not gone unnoticed by market analysts. Several brokerage firms have maintained their positive outlook on GAIL, with many raising their target prices for the stock. Foreign brokerage firms Citi and UBS both have a ‘Buy’ rating on GAIL India shares, with a target price of ₹250 per share.
JM Financial also maintained a ‘Buy’ call on the stock, raising its target price to ₹250 from ₹235 earlier, citing steady growth visibility in the gas transmission business due to higher tariffs and favorable government policies aimed at increasing the share of natural gas in India’s energy mix from the current 7% to 15% by 2030.
The market has responded positively to these developments, with GAIL India’s share price rising more than 10% in the past month and over 17% in the last three months. Year-to-date, the stock has delivered a return of over 51%, and more than 105% in the past year, making it one of the top performers in the sector.
Analysts at JM Financial have also revised their earnings estimates for GAIL, raising their FY25 EBITDA estimates by 15% and FY26-27 EBITDA estimates by approximately 3% to reflect the strong Q1 FY25 gas trading margins and slightly higher gas transmission margins and volumes.
This optimism is shared by the broader market, where GAIL is increasingly seen as a stable and high-yield investment, particularly in light of its strong financials and the supportive policy environment.
