GAIL Tariffs Rise 12%, Falling Short of Expectations

GAIL's transmission tariffs have seen a 12% increase, setting the new rate at ₹65.7 per Million Metric British Thermal Unit (MMBtu). This revision, however, is notably lower than the ₹78 per MMBtu that GAIL had initially sought and also trails the 20% rise anticipated by market analysts. The Petroleum and Natural Gas Regulatory Board (PNGRB) issued these orders late last evening, impacting GAIL's stock performance.

The regulatory body has opted to postpone the review of other critical factors, including actual and future capital and operating expenditures, transmission losses, and revenue sharing adjustments. These will now be addressed in the subsequent tariff review exercise scheduled for financial year 2028, effective April 1, 2028. This phased approach aims to mitigate the immediate financial burden on customers.

Brokerage firm ICICI Securities projects a potential 2.5% to 4.7% hit to GAIL's Earnings Per Share (EPS) for financial years 2027 and 2028 due to the limited tariff increase. Nevertheless, they maintain a 'buy' recommendation with a price target of ₹215, citing the possibility of future upside from deferred adjustments.