GAIL (India) Limited — Q3 FY26 earnings call

Call held 2 Feb 2026

Management summary

GAIL delivered a mixed quarter with gas transmission volumes recovering but petrochemical losses weighing on profitability. The headline YoY decline is misleading due to a Rs.2,440 crore exceptional arbitration settlement in Q3 FY25. The key positive was the PNGRB tariff revision adding Rs.1,200 crores annually, with GAIL pursuing an additional Rs.15/MMBTU. Management maintained marketing margin guidance of Rs.4,000 crores PBT for FY26 despite HH price volatility. Several major pipeline and petrochemical projects are nearing completion in CY2026.

Highlights

  • Turnover at Rs.34,030 crores vs Rs.34,907 crores YoY (decline due to Rs.2,440 crores exceptional income in Q3 FY25)

  • PAT at Rs.1,603 crores vs Rs.3,867 crores YoY (adjusted for exceptional item, core performance stable)

  • Gas transmission volume recovered to 125.45 MMSCMD vs 123.59 MMSCMD QoQ

  • PNGRB approved interim tariff revision from Rs.58.61 to Rs.65.69/MMBTU (+12.1%), Rs.1,200 crores annual impact

  • GAIL filed review petition seeking additional Rs.15/MMBTU tariff increase

  • Board approved in-principle two fertilizer plants along MNJPL corridor - Rs.21,000 crores investment

  • Petrochemical segment loss of Rs.483 crores due to higher input gas cost and lower polymer prices

  • Interim dividend of Rs.5 per share (50% of face value) declared

Concerns

  • Henry Hub price spike to $7.46/MMBTU for February supply

  • Petrochemical segment sustained losses

Key financials

  1. Revenue/Turnover ₹34,030 Cr -2.5%YoY
  2. PBT ₹2,030 Cr -59.6%YoY
  3. PAT ₹1,603 Cr -58.5%YoY
  4. Consolidated Revenue ₹35,253 Cr
  5. Consolidated PBT ₹2,165 Cr
  6. Consolidated PAT ₹1,756 Cr
  7. Gas Marketing Volume 103.98 MMSCMD
  8. Gas Transmission Volume 125.45 MMSCMD
  9. Polymer Production 219 TMT
  10. LHC Production 199 TMT
  11. LPG Transmission 1,188 TMT
  12. CAPEX (Quarter) ₹2,186 Cr
  13. Petchem Input Gas Cost 11.2 $/MMBTU +18.5%YoY

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 crores
    We are expecting to achieve marketing margin of Rs.4,000 crores at PBT level from gas marketing segment in FY26.

    — Shri Rakesh Kumar Jain

  • Marketing Margin (PBT) Gas Marketing · FY27 · Medium confidence Rs.4,000 crores
    For FY27 also we are not saying that we will be having any different number than that... we expect next year also we earn Rs.4,000 crores of marketing margin.

    — Shri Rakesh Kumar Jain

  • Marketing Volume Gas Marketing · FY27 · Medium confidence 109-110 MMSCMD
    If we end up this year 104-105 MMSCMD... maybe 109-110 MMSCMD on a normative basis we should achieve.

    — Shri Rakesh Kumar Jain

Gas Transmission

  • Transmission Volume Gas Transmission · FY26 · High confidence 124-125 MMSCMD
    We are hopeful of achieving our gas transmission guidance of 124 to 125 MMSCMD for FY25-26.

    — Shri Rakesh Kumar Jain

  • Transmission Volume Gas Transmission · FY27 · High confidence 134-135 MMSCMD
    We are expecting at least 134-135 MMSCMD of volume in the coming financial year.

    — Shri Rakesh Kumar Jain

LNG Portfolio

  • LNG Contract Portfolio LNG Portfolio · By 2030 · Medium confidence 22-23 MMTPA
    By 2030 at least... we want to increase our portfolio to around 6-7 MMTPA more from the current level... at least to 22-23 MMTPA.

    — Shri Rakesh Kumar Jain

CAPEX

  • Capital Expenditure CAPEX · FY27 · High confidence Rs.9,000-10,000 crores
    We expect to incur Rs.9,000 to 10,000 crores of CAPEX in financial year '27.

    — Shri Rakesh Kumar Jain

Tariff

  • Pipeline Tariff Impact Tariff · From Jan 2026 · High confidence Rs.1,200 crores per annum
    This represents an increase of approximately 12.1%, leading to a positive impact of approximately Rs.1,200 crores per annum.

    — Shri Rakesh Kumar Jain

Risks & concerns

  • Henry Hub price spike to $7.46/MMBTU for February supply

    high

    Q3 petchem input cost already $11.2/MMBTU vs $9.45 YoY. January settlement at $7.46 will further pressure Q4.

    Analyst acknowledged impact but taking optimization measures; marketing in international markets and sourcing alternatives

  • Petrochemical segment sustained losses

    high

    Rs.483 crores loss in Q3. Management refuses to shut plant despite EBITDA-level losses, citing customer sentiment and short-term nature.

    Management continuing operations to preserve customer relationships and energy efficiency; expect improvement from fy27 with softer gas prices

  • Rupee depreciation impacting margins

    medium

    Exchange rate touched Rs.92. Impacts both gas marketing and petrochemical segments.

    Management acknowledged impact; factored into guidance

  • PNGRB tariff review petition outcome uncertain

    medium

    Rs.15/MMBTU additional tariff sought. If not granted before April 2028, will be considered in regular revision where it becomes Rs.17/MMBTU.

    Management confident in merit but no timeline from regulator

  • LHC segment margin pressure from reduced APM gas allocation

    medium

    New Wells gas allocation cut from 0.3 to 0.2 MMSCMD. Total gas availability for LHC now 1.32 MMSCMD. Production likely ~200 TMT/quarter run rate.

    Management actively engaging with ministry for more allocation

  • Jagdishpur-Haldia pipeline cost escalation

    low

    All other major projects at advanced stage with costs largely certain.

    Management acknowledged as the only project with likely cost escalation

Q&A highlights

5 direct
FY27 Transmission Volume Ramp-up Direct
At least 134-135 MMSCMD... almost 4 MMSCMD from natural growth of CGD, 2 MMSCMD lost power volume to return, 3 MMSCMD from refineries.

Clear breakdown of 10 MMSCMD volume growth drivers for FY27 gives confidence in transmission recovery

Asked by Vivekanand (Ambit)

Tariff Review Petition - Rs.15/MMBTU Additional Direct
Rs.15/MMBTU we are asking will become Rs.17/MMBTU. It's like a fixed deposit in a bank with a 15% pre-tax return.

Significant upside potential if review petition is accepted; management very confident in merit of the case

Asked by Puneet (HSBC)

HH Price Spike Impact on Petchem Direct
January yes, there is a challenge... price settled for January is $7.46/MMBTU applicable for February. But polymer price has gone up Rs.3,500/MT.

HH spike to $7.46 will hurt Q4 petchem further, but polymer price recovery partially offsets

Asked by Amit (Axis Capital)

Ethane Pipeline Strategy for Pata Plant Direct
Ethane is cheaper than gas and will give 20-25% more yield... If we are able to do that, this plant will become profitable even at current level of prices.

Long-term structural solution to chronic petchem losses; C2-C3 pipeline from Vijaipur in 1-1.5 years, dedicated ethane pipeline under consideration

Asked by Amit (Axis Capital)

Fertilizer Plant Economics Direct
12% equity IRR... assured return... three years from board approval.

Rs.21,000 crore investment with assured returns via fertilizer subsidy - significant new growth avenue and anchor load for MNJPL

Asked by Somaiah (Avendus Spark)

Marketing Margin Sustainability Partial
Considering those challenges, I have not revised my marketing guidance... We want to give you something which is certain based on today's assumptions.

Analyst correctly noted volume growth without margin growth implies contraction; management gave conservative guidance acknowledging risks

Asked by Nitin Tiwari (PhillipCapital)

2 min read 4 chapters

Detailed narrative

Gas Transmission Recovery and Tariff Boost

Transmission volumes recovered to 125.45 MMSCMD from 123.59 MMSCMD QoQ, driven by higher consumption from fertilizer, refinery, and CGD sectors, plus resumption of gas supply on 2 sections after Q2 monsoon disruptions. December volume reached 128.65 MMSCMD. The PNGRB interim tariff revision from Rs.58.61 to Rs.65.69/MMBTU (effective Jan 1, 2026) adds Rs.1,200 crores annually. GAIL filed a review petition seeking an additional Rs.15/MMBTU, citing incomplete consideration of OPEX, CAPEX, transmission loss, and revenue sharing. Management expressed strong confidence in the merit of the petition, noting that if delayed to April 2028 regular revision, the ask increases to Rs.17/MMBTU due to time value.

Petrochemical Challenges and Structural Solutions

The petchem segment posted a Rs.483 crore loss on rising input costs ($11.2/MMBTU vs $9.45 YoY) and weak polymer prices. Q4 outlook is worse with HH settling at $7.46/MMBTU for February. However, polymer prices have risen Rs.3,500/MT recently, providing partial offset. Management is pursuing structural solutions: (1) Vijaipur-Pata C2-C3 pipeline to eliminate 10% energy loss in current routing, expected in 1-1.5 years; (2) Dedicated ethane import pipeline under evaluation from West Coast terminals (Hazira/Dahej/Dabhol), which would yield 20-25% more output and make the plant profitable at current prices. New 60 KTA PP plant at Pata being commissioned imminently. 500 KTA PDH-PP at Usar and 1,250 KTA PTA at Mangalore expected by CY2026 end.

LNG Portfolio Strategy and Global Supply Outlook

GAIL has 16.53 MMTPA of LNG contracts: 6.55 MMTPA on HH-linked (5.8 from US + 0.75 from Middle East), ~9 MMTPA on crude-linked (4.5 Ras Gas, 3 SEFE, 1 Vitol, 0.53 ADNOC, 0.42 PLL). Plans to grow to 22-23 MMTPA by 2030 (+6-7 MMTPA). Currently finding Brent-linked contracts more competitive than HH. About 3 MMSCMD kept as open/unhedged volume. Dabhol terminal expansion planned from 5 to 6.3 MMTPA (sanctioned) and eventually to 12.5 MMTPA.

Growth Investments: Fertilizer and Renewables

Board gave in-principle approval for 2 fertilizer plants along MNJPL corridor at Rs.21,000 crores investment, with 12% equity IRR assured return and 3-year construction timeline. Subject to government energy and subsidy policy. These plants also serve as anchor load for the MNJPL pipeline. Renewable energy portfolio expanding from 145 MW to 850+ MW with 170 MW wind (Maharashtra), 700 MW solar (UP), and 35 MW captive solar. Rs.35,000 crores net-zero plan over 10 years. CBG initiative expanding from 1 to 25-30 plants. Retail LNG business with 29 stations planned.

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