GAIL (India) (GAIL IN) – Q4FY26 Result Update – Near-term pressure; medium term recovery intact – BUY

Transmission volumes declined to 119.0mmscmd in Q4FY26 from 125.5/120.8mmscmd in Q3FY26/Q4FY25 Underlying run-rate remained healthy (~129mmscmd during Jan-Feb’26); however, supply disruptions weighed on average Q4 volumes. Standalone reported EBITDA stood at INR11.5bn (PLe: INR20.6bn; BBGe: INR24.7bn; -56.6%/-64.2% QoQ/YoY), primarily due to weak performance in the Trading and Transmission segments, along with continued losses in petchem business. Reported PAT stood at INR12.6bn (PLe: INR10.0bn; BBGe: INR12.5bn; -21.2%/-38.4% QoQ/YoY), impacted by higher interest expense. Lower depreciation partially supported earnings following an increase in the useful life of certain gas, LPG and petchem pipelines. GAIL expects transmission volumes of 115mmscmd under a prolonged West Asia disruption scenario and 119mmscmd assuming normalization by mid-July. In Trading, GAIL expects PBT of INR40bn under a prolonged disruption scenario, improving to INR45bn if normalization occurs by mid-Q2FY27. We build in Transmission volumes of 115mmscmd and estimate Trading PBT of INR31bn in FY27. We maintain our BUY rating, supported by medium-term volume recovery and a favourable gas demand outlook. Stock is currently trading at 14.5x/10.7x EPS. We value the stock at 11.0x FY28E EPS and add INR40/share for investments at a 25% holding company discount, arriving at a TP of INR190/share (earlier: INR170/share)