Stocks to buy: Global brokerage firm Nomura has advised to buy shares of Gail India. Brokerage has fixed a target price of Rs 225 for this stock, which is about 30% more than its previous closed price. Following this report, the company’s shares jumped more than 2.5% during trading on September 11 today.
Nomura believes that Gayle India can get a major benefit due to increase in gas tariffs. Brokerage stated that integrated tariff growth of more than 20% could prove to be positive for its shares. In addition, the company’s petrochemical business may return to the way of recovery from FY27, which will further increase the interest of investors.
The company has requested petroleum and natural gas regulatory boards (PNGRB) to increase gas tariffs by 33% to Rs 78 per MMBTU. Gayle says that gas allocation under Administrated Price Mechanism (APM) has now been reduced to zero. This has increased the cost of substitute gas used in pipeline operations.
Gail India’s financial gas transmission in FY 2024 rose 7% on an annual basis to Rs 11,068 crore. The company described the increase in volume and tariff revision as the main reason behind this. The company has about 65% market share in India’s gas transmission.
Nomura hopes that the tariff may increase from April 2026 to around Rs 70 per mMBTU, ie an increase of about 19.5%. This can lead to an annual jump of 42% in Gas Transmission Ebit in FY27 and 24% increase in group consolidated Ebit.
Although so far this year, Gail India shares have fallen by 6.7% and have fallen by 18% in the last one year, but its shares have given 93% returns in the last three years. The special thing is that the month of September has traditionally been good for this stock. 13 times out of the last 17 years, this stock has given positive returns during the month of September.
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