The spotlight is set on GAIL stock on March 11 following a “sell” recommendation from CLSA, marking the second downgrade by the brokerage firm in three months. Jefferies also maintains an underperform rating for the stock, which closed at Rs 189.30 on the National Stock Exchange on March 7, a slight decline of around 0.6 percent from the previous close.
CLSA, which initially downgraded the stock to underperform in January due to slow EPS growth, foresees limited potential for revaluation and predicts subdued earnings per share growth, signaling a cautious outlook for GAIL in the short term. CLSA sets a target price of Rs 165 for GAIL, while Jefferies’ target stands at Rs 150.
Both brokerages highlighted GAIL’s commitment to energy transition, particularly through its green hydrogen pilot and the commissioning of SSLNG at the Vijaipur site. Analysts are closely monitoring the company’s progress towards its goal of blending 20 percent green hydrogen in transmission volume by 2040, as noted by Jefferies. Nuvama maintains a “hold” recommendation on the stock with a target price of Rs 151. Despite being a diversified player in India’s gas consumption landscape, GAIL faces challenges such as low pipeline utilization and the cyclical nature of the petrochemical business. However, the company’s initiatives towards achieving net-zero emissions by 2040 through hydrogen blending, green H2 production, CBG plant establishment, and LNG dispensing stations installation provide a competitive advantage.
Motilal Oswal holds a “buy” stance on the stock with a revised target price of Rs 215. The brokerage firm anticipates a 14 percent CAGR in EBITDA for FY24-26E, driven by increasing natural gas transmission volumes, significant improvement in petrochemical segment profitability, and the commencement of operations for additional gas transmission pipelines and petrochemical capacity. Over the past year, the stock has recorded a remarkable gain of over 70 percent.
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