GAIL (India) Limited — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

Q2 showed sequential improvement with PAT up 18% QoQ as operations normalized post-monsoon disruptions. However, YoY decline reflects weaker power demand, higher HH prices, and refinery fuel switching. Management remained confident on FY26 marketing guidance of Rs.4,000-4,500 crores PBT and FY27 transmission volume target of 133-134 MMSCMD. Major pipeline commissioning milestones achieved with SAPL and MNJPL near completion. Petrochemical losses continue but expected to improve with HH softening.

Highlights

  • Revenue at Rs.34,972 crores, up 7% YoY; PBT at Rs.2,823 crores, down 18% YoY

  • PAT at Rs.2,217 crores vs Rs.2,672 crores YoY (-17%); QoQ up 18% from Rs.1,886 crores

  • Gas transmission volume recovered to 123.59 MMSCMD from 120.62 MMSCMD in Q1

  • Srikakulam-Angul Pipeline (422 km) dedicated to nation by PM on Oct 16, 2025

  • MNJPL at 97% physical progress; multiple pipelines scheduled for completion in FY26

  • JLPL LPG pipeline capacity expansion from 3.25 to 6.5 MMTPA authorized - Rs.600 crores EBITDA addition

  • Petrochemical segment loss of Rs.299 crores due to elevated HH-linked input gas costs

  • Gas marketing PBT guidance maintained at Rs.4,000-4,500 crores for FY26

Concerns

  • FY26 transmission volume guidance downward revision to 123-124 MMSCMD from original higher target

  • Petrochemical losses persisting with HH prices ~50% above last year

Key financials

2 periods

Headline

  • Revenue/Turnover
    ₹34,972 Cr
    YoY +6.6%
  • PBT
    ₹2,823 Cr
    YoY -18.2%
  • PAT
    ₹2,217 Cr
    YoY -17%
  • Consolidated Revenue
    ₹35,594 Cr
  • Consolidated PBT
    ₹2,565 Cr
  • Consolidated PAT
    ₹1,972 Cr
  • Gas Marketing Volume
    105.49 MMSCMD
  • Gas Transmission Volume
    123.59 MMSCMD
  • Polymer Production
    220 TMT
  • LHC Production
    221 TMT
  • LPG Transmission
    1,167 TMT
  • CAPEX (Quarter)
    ₹1,662 Cr
  • Petchem Input Gas Cost
    10.5 $/MMBTU

H1

  • Gas Marketing PBT
    ₹2,221 Cr
  • Gas Marketing Gross Margin
    ₹2,866 Cr

What they filed

Q1 FY27: revenue up 12.0%, net profit up 127.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue32,912 34,937 35,685 34,769 35,008 +6%34,051 −3%34,773 −3%38,953 +12%
EBITDA3,745 2,838 3,216 3,334 3,191 −15%2,655 −6%1,152 −64%6,376 +91%
Net profit2,672 3,867 2,049 1,886 2,217 −17%1,603 −59%1,262 −38%4,292 +128%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Gas Marketing

  • Marketing Margin (PBT) Gas Marketing · FY26 · High confidence Rs.4,000-4,500 crores
    We will certainly touch Rs.4,500 crores of guidance at PBT level, and may even exceed that.

    — Rakesh Kumar Jain

  • Marketing Margin (PBT) Gas Marketing · FY27 · Medium confidence ~Rs.4,000-4,500 crores
    Next year will be around same level. We do not expect any new addition to this guidance.

    — Rakesh Kumar Jain

Gas Transmission

  • Transmission Volume Gas Transmission · FY26 · High confidence 123-124 MMSCMD
    The annual transmission volume for Financial Year '25-'26 is expected to be at the level of around 123 to 124 MMSCMD.

    — Rakesh Kumar Jain

  • Transmission Volume Gas Transmission · FY27 · High confidence 133-134 MMSCMD
    GAIL expects transmission volume to be increased by around 8 MMSCMD to 10 MMSCMD... around 133 to 134 MMSCMD in Financial Year '27.

    — Rakesh Kumar Jain

Tariff

  • Integrated Pipeline Tariff Tariff · Expected Nov 2025 · Medium confidence Rs.70-73/MMBTU (conservative estimate)
    Our guidance on conservative basis of Rs.70... should increase by Rs.2 to Rs.3.

    — Rakesh Kumar Jain

Petrochemicals

  • PDH-PP EBITDA per ton Petrochemicals · FY28 onwards · Medium confidence $250-300/MT
    Maybe $250 per metric ton to $300 per metric ton will be kind of EBITDA will be available to us.

    — Rakesh Kumar Jain

Risks & concerns

  • FY26 transmission volume guidance downward revision to 123-124 MMSCMD from original higher target

    high

    Multiple adverse factors: early/heavy monsoon, 4 pipeline disruptions from floods, moderate summer reducing power demand, spot gas prices driving refinery fuel switching.

    Management transparent about causes - weak power demand, monsoon disruptions, refinery fuel switching; expects fy27 recovery

  • Petrochemical losses persisting with HH prices ~50% above last year

    high

    Input gas cost at $10.5-10.6/MMBTU vs ~$7 last year. Loss of Rs.299 crores in Q2. Similar level expected for rest of FY26.

    Management expects hh softening from fy27; pursuing cost optimization via c2-c3 pipeline, apc, debottlenecking

  • LHC segment margin pressure from APM gas allocation cut

    medium

    New wells gas allocation cut from 0.32 to 0.2 MMSCMD from Oct 2025. Estimated 33 TMT production impact in H2. LHC prices also down Rs.4,600/MT.

    Management constantly engaging with ministry for additional domestic gas allocation

  • Tariff revision timing uncertainty

    medium

    Submitted Aug 2024 at Rs.78/MMBTU. Process completed but outcome pending. Each month of delay adds ~Rs.0.20/MMBTU.

    Analyst expect it can come any time, maybe november; confident in rs.70+ outcome

  • Dabhol terminal operating at only 50% without heating system

    low

    5 MMTPA nameplate capacity constrained to ~2.5 MMTPA. Dependent on RGPPL running for heating system access currently.

    Management heating system expected in fy27; expansion to 6.5 mmtpa sanctioned

Q&A highlights

5 direct
FY27 Volume Growth Breakdown Direct
3-3.5 MMSCMD from CGD natural growth, 3 MMSCMD from power, 2 MMSCMD from new pipelines, 2-3 MMSCMD from refineries, 1-1.5 MMSCMD from pipeline restoration.

Detailed 8-10 MMSCMD volume recovery breakdown provides visibility on FY27 transmission growth drivers

Asked by Vikash Jain (CLSA)

Tariff Revision Expectations Direct
We submitted Rs.78... conservative basis Rs.70, should increase by Rs.2-3 due to regulatory delays and new revenue sharing rules.

Tariff upside potential of Rs.12-20/MMBTU from current Rs.58.61 is a significant earnings driver

Asked by Balaji Das (Alliance Services)

GAIL Gas IPO Timeline Direct
Consultant has already been selected... we expect a one year timeline or so should be good enough.

GAIL Gas listing could unlock value; marketing 7.72 MMSCMD with largest GA coverage

Asked by Balaji Das (Alliance Services)

LNG Contract Portfolio Details Direct
Only 0.75 million tons open, rest back-to-back. 4.8 million tons on fixed margin with fertilizer customers. 2.5-3 MMSCMD HH volume kept open for arbitrage.

Clarifies risk profile - only ~5% volume truly exposed to market risk; majority back-to-back with fixed margins

Asked by Somaiah (Avendus Spark)

Power Sector Demand Sustainability Direct
We continue to sell 5-6 MMSCMD regularly to power sector... power sector is also coming up with regular demand largely to balance the grid because of renewable energy.

Power demand not just seasonal peaking; structural grid-balancing demand emerging from renewable integration

Asked by Nirmal (Aditya Birla Sun Life)

2 min read 4 chapters

Detailed narrative

Pipeline Commissioning Wave and Transmission Recovery

GAIL is in the midst of a major pipeline commissioning wave. Srikakulam-Angul (422 km) was inaugurated by the PM on Oct 16. MNJPL at 97% progress with PESO approvals received for Mumbai-Nagpur (693 km) and Chhattisgarh-Odisha (489 km) sections. KKMBPL Phase 2 and Jagdishpur-Haldia scheduled for FY26 completion; Gurdaspur-Jammu for FY27. These new pipelines expected to contribute ~2 MMSCMD in FY27. Transmission volumes improved QoQ to 123.59 MMSCMD but annual guidance revised down to 123-124 MMSCMD due to weak power demand, monsoon disruptions, and refinery fuel switching.

Marketing Segment Resilience and Portfolio Structure

Gas marketing PBT of Rs.1,227 crores in Q2 brought H1 to Rs.2,221 crores, on track for Rs.4,000-4,500 crores FY26 guidance. Portfolio of 16.5 MMTPA contracts with only 0.75 MMTPA truly open (unhedged). 7.8 MMTPA on fixed margins (4.8 MT from Ras Gas/fixed margin contracts, 3 MT from crude-linked back-to-back). 5.8 MT US HH contracts largely back-to-back with 2.5-3 MMSCMD kept open for arbitrage. Spot procurement ~10% of total for meeting incremental demand. FOB-DES swaps and destination swaps used to optimize shipping costs.

Growth Investments: LPG Pipeline Expansion and GAIL Gas IPO

JLPL LPG pipeline capacity doubling from 3.25 to 6.5 MMTPA approved, adding ~Rs.700 crores revenue and ~Rs.600 crores EBITDA annually (with 3.4% annual tariff escalation). Vijaipur-Bina pipeline (105 km, 3 MMSCMD, Rs.450 crores) authorized to connect BPCL Bina refinery. GAIL Gas IPO process initiated with consultant selection; ~1 year study timeline. GAIL Gas currently marketing 7.72 MMSCMD with 665 CNG stations and 11.74 lakh DPNG connections.

Dabhol Terminal Expansion Strategy

Dabhol terminal operating as full-weather terminal at ~50% of 5 MMTPA nameplate due to lack of heating system (expected FY27). Expansion to 6.5 MMTPA sanctioned with evacuation pipeline (DUPL/DPPL) expansion authorized by PNGRB. Further expansion to 10-12 MMTPA under discussion. Current regasification capacity: 2.5 MMTPA at Dahej + 1.5 MMTPA at Dhamra + 2.5 MMTPA at Dabhol. Additional capacity tie-ups being pursued with terminal operators.

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