Down 30% from 52-week high, this multibagger PSU stock rises 7% today; check target

GAIL share price: State-run gas marketing player GAIL (India) Ltd surged nearly 7 per cent during the trading session on Monday after the Petroleum and Natural Gas Regulatory Board (PNGRB) initiated the process to amend the Natural Gas Pipeline Tariff Regulations, 2008.

This move comes after PNGRB received requests and suggestions from the industry committee regarding the tariff framework. The board has invited public comments on the proposed amendments by April 11, which are aimed to bring more flexibility in tariff structures through updated cost pass-through mechanisms and volume-based assumptions.

If finalized by June 2025, these reforms could lead to higher transmission tariffs, directly benefiting major gas transmission players like GAIL and GSPL. This led to sharp moves in the gas transmission players like GAIL and Gujarat State Petronet (GSPL) in the early trade.

Following the news, shares of GAIL surged 6.75 per cent to Rs 186.50 on Monday, commanding a total market capitalization of more than Rs 1.2 lakh crore. The scrip had settled at Rs 174.70 in the previous trading session. Even after a 24 per cent rebound from its 52-week low at Rs 150.60 hit in earlier this month, the stock is down 30 per cent from its 52-week high at Rs 246.35.

The proposed tariff structure could act as a catalyst for transmission companies, enabling better margins and revenue visibility, said the overseas brokerage firm CLSA, which is expecting a boost in natural gas adoption in India from 6 per cent to 15 per cent of the energy mix.

Motilal Oswal estimates a 7 per cent CAGR in transmission and marketing volumes over FY24-27. The International Energy Agency estimates India’s natural gas consumption to rise 60 per cent by 2030 from 65bcm in 2023. IEA pegs India’s LNG consumption to grow at 11 per cent per annum over 2023-2030, driven by the city gas distribution, power and industrial sectors, it said.

"GAIL will be the key beneficiary of rising gas penetration in India. GAIL is set to expand its petrochemical capacity from 810ktpa currently to ~2.7mmtpa by FY27 as PDH-PP and Gail Mangalore Petrochemicals Ltd projects commence operations. We believe a diversified product slate should help to reduce petchem earnings volatility," it said with a 'buy' rating and a target price of Rs 195.

Among other brokerage firms, YES Securities has a 'buy' rating on the stock with a target price of Rs 211 on GAIL. However, Prabhudas Lilladher has an 'accumulate' rating for GAIL with a target price of Rs 204 on the stock, while Antique Stock Broking has given it a 'hold' rating with a target price of Rs 180.