GAIL shares jump 3% after announcing ₹60,000 crore ethane capex; JP Morgan sees 20% upside

Shares of GAIL India rose by 3 per cent to ₹214 during afternoon trading on June 11, following Morgan Stanley's reaffirmation of its 'buy' rating on the stock. This comes after GAIL's announcement of a ₹60,000 crore investment in a 1,500 KTA ethane cracker project in Madhya Pradesh. 

The international brokerage has set a price target of ₹250, indicating an upside of over 20 percent from current levels.

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On the other hand, brokerage firm Elara Securities has given ‘accumulate’ rating to the GAIL India stock, with a target price of ₹227. “We up FY26E EPS 3% due to higher gas transmission and marketing volume. Thus, we raise TP to INR 227 (from INR 191). We reiterate Accumulate as GAIL has run-up 62% in the past three months, partly factoring in strong gas volume growth outlook, led by accelerating CGD demand and +150mn tonnes LNG export capacity addition globally in CY24-28,” the brokerage firm said.

The state-owned energy corporation has submitted a request to the Madhya Pradesh state government for suitable enablers for the project, as stated in an exchange filing.

The MP Industrial Development Corporation Ltd. will provide approximately 800 hectares of land, and the state government has already initiated this process.

"Investment approval from GAIL's Board shall be sought after favourable outcome on enablers, the company said in the filing. This development occurs as EU cracker capacity is shutting down and margins remain weak.

For the March quarter, GAIL reported a 5.6 per cent decline in revenue to ₹32,317 crore, with net profit dropping by over 23% due to lower revenue and weaker-than-expected performance in the gas marketing segment.

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As of the end of the March quarter, the government held a 51.9% stake in GAIL. Indian Oil Corporation owned a 2.5% stake, and ONGC held a 5% stake. Additionally, approximately 11.97 lakh shareholders with share capital up to ₹2 lakh had a stake in GAIL.

GAIL stock has increased nearly 30 per cent in 2024 so far, and has risen by more than 100 per cent over the past 12 months.