Why GAIL Share Price is Rising

The gas sector is growing rapidly, driven by rising energy demand and an increased focus on cleaner fuels. Natural gas is gaining traction as an essential part of India's energy mix, supported by favourable government policies.

As industries shift to cleaner sources, natural gas infrastructure is expanding, boosting growth in the sector. This momentum has led to increased investor interest, making it one of the more dynamic areas within India's energy market.

Gas Authority of India (GAIL) plays a major role in this sector. It is India's largest state-owned natural gas processing and distribution company.

GAIL manages a vast network of pipelines, supplying gas across the country, and is involved in petrochemicals, liquefied natural gas (LNG) trading, and gas processing.

GAIL's share price has recently caught investor attention, with a 6.3% jump in just one day. The sharp rally came after declaring quarterly results.

Let's take a look at the quarterly results of the company to understand why GAIL share price is rising.

Mixed Quarterly Results

For Q2 FY25 GAIL posted an 11% year-on-year (YoY) increase in net profit, reaching Rs 26.7 billion (bn). This growth in profit was primarily driven by a rise in earnings from the gas transmission business. Additionally, a recovery in the petrochemicals segment offset weaker performance in marketing margins, balancing the company's overall profitability.

However, its revenue from operations saw a mild increase of 3.5% YoY, reaching Rs 329.3 bn in the July-September period. This rise was bolstered by stronger demand and stable gas transmission volumes, contributing to steady revenue growth despite some challenges.

The gas marketing segment, however, recorded a 26% drop in operating profit, falling to Rs 13.3 bn. This decrease was due to lower marketing margins amid softer domestic gas prices.

Meanwhile, the gas transmission business delivered an 8% improvement in operating profit, which grew to Rs 14 bn, reflecting higher transmission volumes and continued demand for GAIL's network services.

The petrochemicals segment swung back into profitability, reporting a Rs 1.6 bn profit after a Rs 1.6 bn loss in the same quarter last year. This recovery is attributed to increased demand for petrochemical products and favourable pricing.

Additionally, the LPG and liquid hydrocarbons segment posted an operating profit of Rs 2.5 bn, a significant improvement from last year's Rs 0.2 bn loss, showing signs of stabilisation in these product lines.

Despite reporting mixed quarterly results, GAIL share price remains strong. Markets remain optimistic due to higher transmission and trading volumes and a stable outlook for gas prices.

What Next?

As India's leading natural gas marketing company, GAIL is setting ambitious goals to grow its business globally and expand its LNG trading operations.

The company is working towards establishing itself as a major player in the global LNG market, aiming to increase its trading volumes significantly by 2030.

Currently, GAIL has long-term contracts to procure 14 million (m) tonnes of LNG from various suppliers, which represents three-fourths of India's total contracted LNG purchases.

This solid base allows GAIL to seek opportunities in the international LNG spot market, actively buying and selling to maximise profitability from favourable price differences.

To support this expansion, GAIL has prioritised infrastructure development, committing Rs 1.9 bn in capital expenditure this quarter and reaching a total of Rs 3.5 bn in the first half of FY25.

This investment is mainly focused on expanding its pipeline network and strengthening petrochemical capabilities. This will enhance gas availability and support the company's growth.

GAIL's Singapore subsidiary is also set to play a crucial role, handling the sourcing and trading of LNG in the global market. By scaling up this subsidiary's operations, GAIL expects a stronger topline boost and increased international visibility.

How GAIL Share Price has Performed Recently

In the past five days, GAIL share price has rallied 3.5%. In the last month, it is down 6.7%.

In 2024, so far its share price has rallied 25.6% and it rallied 69.2% in the last one year.

The stock touched its 52-week high of Rs 246.4 on 31 July 2024 and a 52-week low of Rs 122.9 on 22 November 2023.

About GAIL

GAIL (Gas Authority of India Limited) is a prominent Indian government-owned company specialising in the natural gas sector.

The company is a leader in this segment with around 75% of its revenues coming from natural gas marketing.

Additionally, GAIL is involved in various segments, including petrochemicals, natural gas transmission, LPG (liquefied petroleum gas), among others.

The company claims to be one of the top 10 global liquefied natural gas portfolio marketers.

Moreover, the company accounts for 67% of the piped natural gas connections in India.

For more details about the company, you can have a look at the GAIL fact sheet and quarterly results on our website.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

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