At a Glance
India’s gas giant has scale, pipelines, dividends… and yet — it delivers more pressure than performance. After five years of volatile earnings, patchy margins, and inflation-defying underperformance, GAIL still trades at a P/E of 11. Because it’s profitable. Just not exciting.
1. 🚨 TL;DR
- Revenue (FY21 → FY25): ₹57,372 Cr → ₹1,41,903 Cr ✅ (+24% CAGR)
- Net Profit: ₹6,143 Cr → ₹12,463 Cr ✅ (but lumpy AF)
- OPM: Down from 13% (pre-COVID) → 11% now
- Dividend Yield: ~3.6% (aka PSU compensation package)
- Other Income (FY25): ₹5,211 Cr — inflated optics?
- Fair Value Range (FY26E): ₹155 – ₹175
- Verdict: Cash-rich, asset-heavy, dividend-happy — but don’t expect fireworks.
2. 🛢️ Business Model: Pipes, Petrochems & Public-Sector Problems
GAIL is the OG of India’s gas grid with ~11,500 km of natural gas pipelines and over 2,300 km of LPG pipelines. Business segments:
- Gas Transmission (~60% revenue)
- Petrochemicals (~20%)
- LPG/Liquid Hydrocarbons (~15%)
- Others: CGD, LNG trading, renewables, hydrogen ambitions
Integrated, regulated, and incapable of consistent margin expansion.
3. 📈 Financials: Pipeline Is Long. Growth Isn’t.
Revenue:
- FY21: ₹57,372 Cr
- FY22: ₹92,770 Cr
- FY23: ₹1,45,668 Cr
- FY24: ₹1,33,228 Cr
- FY25: ₹1,41,903 Cr ✅
Topline surged post-2021 gas price boom, but FY24/25 revenue stayed volatile.
Net Profit:
- FY21: ₹6,143 Cr
- FY22: ₹12,304 Cr
- FY23: ₹5,596 Cr
- FY24: ₹9,903 Cr
- FY25: ₹12,463 Cr ✅
FY25 profit surge includes ₹5,211 Cr other income. Core performance = less glamorous.
Margins:
- OPM (FY25): 11%
- Financing cost: ₹748 Cr
- EPS: ₹18.93
- Dividend Payout: 40% of PAT
PSU-style consistency: cash in, div out, performance meh.
4. 🧮 Key Ratios That Matter
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 10% | 15% | 14% |
| ROE | 8.5% | 15% | 13% |
| Net Profit | ₹5,596 Cr | ₹9,903 Cr | ₹12,463 Cr |
| Dividend Yield | 5.2% | 3.8% | 3.6% |
| P/E | ~11.2x | Fair-ish | Flat |
Operating cash flows are strong. Capex continues. Stock price? Still waiting for its moment.
5. 🇮🇳 Ownership: Fully PSU, Fully Predictable
- Promoter (GoI): 51.88%
- FII: Shrinking — from 19.9% → 14.8%
- DII: Growing — now 19%
- Public Holding: Just 6.7% (everyone’s given up?)
Institutional churn reflects hope fatigue.
6. ⚖️ Peer Comparison: Gassy But Cheap
| Company | P/E | ROE | Dividend Yield | FY25 PAT |
|---|---|---|---|---|
| GAIL | 11.2x | 13% | 3.6% | ₹12,463 Cr |
| Guj State Petronet | 15.9x | 15% | 1.6% | ₹1,400 Cr |
| Petronet LNG | ~13x | 22% | 4% | ₹3,000+ Cr |
GAIL is cheap — and it should be. It’s a cash cow, not a growth engine.
7. 📉 Valuation & Fair Value Estimate
CMP: ₹180
FY25 EPS: ₹18.93
FY26E EPS: ~₹17 (normalized without other income)
P/E Band: 9–10x for PSU utilities with high capex, moderate growth
👉 Fair Value Range (FY26E): ₹155 – ₹175
Add a ₹6–7 dividend and you’re getting a PSU FD with bonus ESG points.
🧠 Final Verdict: A Utility You Hold, Not Hype
GAIL is that uncle who never retires, never innovates, but pays your rent on time.
If you want:
✅ Defensive exposure
✅ 3.5%+ yield
✅ Govt-backed balance sheet
✅ Exposure to India’s gas infrastructure buildout
— it’s solid.
But if you want 20% CAGR, digital blitz scaling, or green hydrogen hype with margin expansion? Try elsewhere.
This stock won’t explode. But it also won’t implode.
✍️ Written by Prashant | 📅 19 June 2025
🏷️ Tags
GAIL India, PSU Gas Stocks, Natural Gas Transmission, Dividend PSU Stocks, Indian Oil & Gas Sector, GAIL FY25 Results, Gas Utilities India, Petrochemical Stocks, Green Hydrogen India, PSU Stock Recap, EduInvesting GAIL Analysis, Pipeline Infrastructure, GAIL vs Petronet, High Dividend Yield Stocks, Government Owned Stocks
