GAIL India share price jumps over 5% to 52-week high as Q1 results beat estimates. Should you buy the stock?

GAIL India share price jumped over 5% to hit a 52-week high in early trade Wednesday after the country’s largest gas distributor reported strong Q1 results beating street estimates. GAIL shares rallied as much as 5.43% to ₹246.35 apiece on the BSE.

GAIL (India) posted a consolidated net profit of ₹3,183.35 crore in the first quarter of FY25, registering a growth of 77.5% from ₹1,792.99 crore in the year-ago quarter, on account of increased gas transmission volumes, increased domestic natural gas marketing volume and improved natural gas marketing margins.

On a sequential basis, net profit growth of the company was 28.6%.

Revenue from operations in Q1FY25 increased marginally to ₹34,821.89 crore from ₹32,848.78 crore, year-on-year (YoY).

Sandeep Kumar Gupta, Chairman & Managing Director, GAIL said that, the company has incurred a capex of about ₹1,659 crore during the current quarter, mainly on Pipelines, Petrochemicals, Equity to JVs, etc. which is about 21% of annual target of ₹8,044 crore.

GAIL India’s EBIT from the natural gas transmission segment in the June quarter rose 47.3% to ₹1,446.87 crore from ₹982.45 crore in the March quarter. The growth was 40% from ₹1,028.33 crore, YoY.

Natural Gas Marketing segment EBIT jumped to ₹2,036.13 crore from ₹1,507.65 crore, QoQ. Petchem segment reported an EBIT loss of ₹49.31 crore as against EBIT of ₹533.41 crore, QoQ, and EBIT loss of ₹301.75 crore, YoY.

Foreign brokerage firms Citi and UBS both have ‘Buy’ rating on GAIL India shares with target price of ₹250 apiece.

JM Financial maintain a ‘Buy’ call on GAIL shares and raised the target price to ₹250 per share from ₹235 earlier 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% by 2030 versus ~7% currently.

The brokerage firm raised its FY25 EBITDA estimates by 15% and FY26-27 EBITDA estimates by ~3% to account for strong Q1FY25 gas trading margin and slightly higher gas transmission margin/volume.

GAIL India share price has risen more than 10% in one month and over 17% in three months. The stock has given over 51% year-to-date (YTD) returns and more than 105% returns in one year.

At 9:50 am, GAIL India shares were trading 4.94% higher at ₹245.20 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.