GAIL

GAIL’s 4QFY25 EBITDA came in 11% above our est. at INR 32.2b, as weak transmission and petchem performances were more than offset by robust gas marketing performance. Reported PAT was in line at INR 20.5b, as other income came in below our est., and the tax rate was above our estimate. Natural gas transmission/marketing volumes stood at 120.8mmscmd/ 106.5mmscmd, and petchem sales were in line at 229tmt. Outlook We reiterate our BUY rating on GAIL with an SoTP-based TP of INR212. During FY25-27, we estimate an 11% CAGR in PAT driven by: An increase in natural gas transmission volumes to 146mmscmd in FY27 from 127mmscmd in FY25; Healthy trading segment profitability with guided EBIT of at least INR 40b-45b in FY26. We expect RoE to improve to 13.8% in FY26 from 9.5% in FY23, with a healthy FCF generation of INR 48.3b in FY26 (vs. INR 45.3b in FY23), which we believe can support its valuations.