The tension across West Asia continues to weigh on sentiment, especially across the oil and gas sector. Attacks on Qatar’s energy infrastructure are seen as a key negative for stocks like GAIL (India). This is impacting GAIL’s gas transmission.
Nomura has, as a result, cut its target price to Rs 185, from Rs 209. However, this still implies an upside potential of 34%. Nomura has also maintained its Buy call on the stock.
Impact of Qatar energy force majeure
A force majeure at Qatar Energy’s Ras Raffan LNG export terminal is significantly impacting GAIL’s gas transmission volumes. The current run rate has dropped below 100 mmscmd, and Nomura expects GAIL’s FY27 transmission volume to be affected by 13% as a result, which may continue for another four months.
“We believe the impact on India is only short-term, given India-specific LNG trains were not harmed,” said Nomura.
Nomura in GAIL: Reduced financial estimates and target price
Due to lower projected volumes, Nomura cut its FY27 and FY28 EBITDA estimates for GAIL by 15% and 11%, respectively. On a yearly basis, FY27 EBITDA for gas transmission is down by 8% to Rs 7,930 crore, as part of the impact is offset by the higher transmission tariff starting Jan 2026.
GAIL: Petrochemical plant turnaround
Also, GAIL’s Pata petrochemical plant is undergoing an early annual turnaround. This was necessitated by the complete stoppage of rich gas supply from Qatar, which serves as a critical feedstock for the plant’s olefins cracker.
Domestic gas supply for GAIL’s LPG production segment continues as normal, and there is no impact from ongoing gas shortages.
Gas marketing volume vs. margin
While gas marketing volumes are expected to drop by 13% for FY27, Nomura noted that rising spreads between LNG contracts could provide a margin benefit to help offset the volume decline.
“There could be some benefit on the margin front, which we think could offset the impact of lower volumes on overall margins,” said the brokerage house.
Dominant market position and long-term outlook
Despite short-term disruptions, GAIL remains India’s largest integrated gas company, holding a 70% market share in gas transmission and over 50% in gas marketing. Nomura views the company as an attractive long-term play on India’s goal to increase the share of natural gas in its energy basket from 6% to 15%.
GAIL share price performance
The share price of GAIL has remained unchanged in the last five trading sessions. The stock has dropped over 18% in the past one month and 22% in the last six months. GAIL’s share price has erased 24% of investors’ wealth over the previous one year.