GAIL India Ltd: 1QFY27: A strong, commodity-led beat

Research evidence excerpt

GAIL India Ltd: 1QFY27: A strong, commodity-led beat

s up Adj. EBITDA - 28E (Rs mn) 172,685 153,610 -11.0%

sharply. The rolling purchase costs will catch up 7-8 months from now, and can

pressure trading margins then. We consequently cut our FY28 marketing Style Exposure

EBITDA estimates, driving PAT lower by 10%, 2) Some volumes of HH linked

purchase volumes are sold at oil linked benchmarks. This spread was also very

wide in 1Q.

• Transmission volume upside: Gas transmission volumes of 122 mmscmd for

1Q were higher than GAIL’s earlier FY27 guidance of 119 mmscmd. GAIL has

now increased its full year guidance to 123 mmscmd. LNG imports into India

recovered rapidly in May and June (here), which helped the segment's topline.

The EBITDA beat was on account of lower costs QoQ: a) on account of a

reduction in provisions (Rs.1.1bn in 4Q to Rs.0.1bn in 1Q), but also b) due to

relatively stable gas operating costs. There was a risk that higher gas prices

would temporarily increase pipeline operating costs.

• Commissioning of several new capacities near-term: a) GAIL has

commissioned the 1707 km Mumbai-Nagpur-Jharsuguda pipeline in May, b)

the JHBDPL remaining section, KKMBPL Phase 2, Gurdaspur-Jammu

pipeline, and C2/C3 pipeline are all scheduled for completion in FY27. The

Vijaipur-Bina pipeline and the DUPL-DPPL capacity augmentation are

scheduled for completion in FY27-’28, c) The 1,250 KTPA PTA plant at GMPL

is currently in ‘advanced stages of commissioning’, d) the 500 KTPA PDH

plant is expected commission in FY28, d) the ambient heating system at the

Dabhol LNG terminal should be completed by June 27. GAIL has received

authorization for three new LPG pipelines and is evaluating construction of

two fertilizer plants in the country. The company has guided to overall capex