GAIL (India) Ltd. , the country's largest gas transmission and distribution company, saw its shares climb 2.8% to ₹178.74 amid expectations of a significant pipeline tariff revision. The Petroleum and Natural Gas Regulatory Board (PNGRB) is reportedly fast-tracking its decision on updating the tariffs, with an announcement anticipated in the coming days.

Potential Tariff Increase

Sources suggest that the PNGRB might implement a substantial increase in pipeline tariffs. A board member previously hinted at a possible 20% hike. GAIL's current pipeline tariff stands at ₹58.59 per million British thermal units (mmBtu), with industry observers speculating that the revised rate could approach ₹70.00/mmBtu.

Impact on GAIL's Financials

The potential tariff revision has caught the attention of major brokerages, who project a significant positive impact on GAIL's financial performance:

• Jefferies estimates that a 10% or 20% increase in tariffs could boost GAIL's transmission EBITDA by 13% and 26% respectively. Based on these projections, they have set fair value targets for GAIL's stock between ₹235.00 and ₹250.00.

• Nomura anticipates that tariffs could reach ₹70.00/mmBtu by April 2026. This increase is expected to drive a 42% year-on-year growth in GAIL's gas transmission EBIT (Earnings Before Interest and Taxes).

Long-Awaited Revision

The upcoming tariff revision is particularly significant as pipeline tariffs have remained unchanged since 2018. This stagnation persisted despite GAIL's substantial pipeline expansion and rising capital expenditure over the years.

Market Reaction

The market's positive response to the potential tariff hike reflects investor optimism about GAIL's future earnings potential. The 2.8% increase in share price indicates that market participants are factoring in the expected benefits of higher transmission revenues.

Recent Corporate Developments

In a recent corporate announcement, GAIL informed the stock exchanges about the appointment of new Joint Statutory Auditors for the fiscal year 2025-26. The Comptroller & Auditor General of India (CAG) has appointed M/s Ravi Rajan & Co. LLP and M/s Arun K Agarwal & Associates, both Chartered Accountants firms based in New Delhi, to this role. This appointment demonstrates GAIL's commitment to maintaining robust financial oversight and compliance with regulatory requirements.

As investors await the PNGRB's official announcement on pipeline tariffs, GAIL's stock remains in focus, with market participants closely monitoring developments that could significantly impact the company's financial trajectory.

GAIL (India) Limited , the country's largest gas transmission and distribution company, is facing a significant legal challenge while simultaneously exploring new business opportunities.

Arbitration Counter Claim

GAIL is embroiled in a legal dispute with Focus Energy Limited and its associated companies. In ongoing arbitration proceedings, Focus Energy Limited has filed a substantial counter claim against GAIL amounting to Rs 529.32 crore, with additional interest demanded.

The arbitration case centers around disputes over Annual Take or Pay obligations between GAIL and Focus Energy Limited. GAIL had initially filed claims regarding an unadjusted balance in the Annual Take or Pay amount. However, Focus Energy Limited and its associates have denied all claims made by GAIL.

According to the LODR (Listing Obligations and Disclosure Requirements) data filed by GAIL, the company received the Statement of Defence and Counter Claim at 10:48 PM, with access to detailed documents granted the following day through a Google Drive link.

Exploration of GAIL Gas Listing

In a separate development, GAIL is exploring the listing of its city gas distribution arm GAIL Gas (GGL) on Indian stock exchanges. The company has floated a tender to hire a consultant to study various aspects of the listing process.

GGL serves natural gas to approximately 6% of India's population and operates across 25 geographical areas in 49 districts across 13 states. The company reported its highest-ever gross turnover of Rs 10944.00 crore and profit after tax of Rs 323.00 crore, driven by 32% year-on-year growth in CNG sales to 267 million standard cubic meters.

Future Outlook

GGL expects gas usage by the CGD sector to grow at 13% CAGR until FY30, compared to 8.4% annual growth between FY14-FY24. The company is implementing CGD projects in 16 geographical areas across eight states and contemplating acquisition of GAIL's 6 geographical areas across four states.

India aims to increase natural gas share in its primary energy mix from 6% to 15% by 2030, with CGD expected to account for one-third of cumulative consumption by 2030.

As these developments unfold, stakeholders will be closely watching both the outcome of the arbitration proceedings and the potential listing of GAIL Gas, which could significantly impact GAIL's financial position and market standing in the coming years.