GAIL Q4 FY25: Net Profit Falls 47%, Revenue Rises Marginally

GAIL (India) Ltd., the state-owned natural gas transmission and marketing company, declared its financial results for the fourth quarter of FY2025 on 13th May 2025. The company reported a net profit of ₹2,049 crore for Q4 FY25, which marks a sharp 47% sequential decline compared to ₹3,867 crore in Q3 FY25. The drop was largely due to the absence of an extraordinary one-time gain of ₹2,440 crore that boosted Q3 profits.

Despite the decline in bottom-line earnings, GAIL demonstrated operational improvement, as revenue from operations rose 2% quarter-on-quarter to ₹35,685 crore, and EBITDA increased by 13.3% to ₹3,216 crore. These improvements were supported by stable gas trading volumes, a marginal rise in gas transmission, and improved margins.

This article offers a detailed analysis of GAIL’s Q4 FY25 financial performance, annual trends, share movements, dividend declaration, and outlook for FY26.

GAIL Q4 FY25 Results: Key Financial Metrics

Performance Review: Revenue and EBITDA Growth Despite Profit Dip

GAIL reported sequential revenue growth of 2% during Q4 FY25, reaching ₹35,685 crore. This marginal improvement reflects continued recovery in demand for natural gas across sectors such as power, fertilizer, and city gas distribution.

The company’s EBITDA increased by 13.3% to ₹3,216 crore in Q4 FY25, reflecting operational resilience. Notably, EBITDA margin improved to 9.0%, up from 8.1% in Q3 FY25. This margin expansion was attributed to:

• Stable gas transmission volumes.

• Improved realizations in gas trading.

• Efficient cost management and pipeline operations.

However, net profit dropped sharply by 47% on a quarter-on-quarter basis. This was expected due to the exceptional gain of ₹2,440 crore in Q3 FY25 from the sale of certain non-core assets and deferred tax adjustments. If this one-time gain is excluded, Q4’s earnings are broadly in line with expectations.

Annual Performance & Operational Highlights

For the full fiscal year ending 31st March 2025, GAIL demonstrated operational stability and profitability despite fluctuating commodity prices and global energy volatility.

Key Highlights:

• Steady gas demand in core sectors drove consistent transmission and marketing operations.

• Improved gas trading margins supported EBITDA and free cash flows.

• New pipeline projects and infrastructure expansion in southern and eastern India progressed as per schedule.

Dividend Declaration: ₹1 Per Share

GAIL’s board has proposed a final dividend of ₹1 per share, which equates to 10% of the face value of ₹10 per equity share. This payout will be subject to shareholder approval in the upcoming AGM, and the record date for dividend eligibility will be declared later.

The dividend reflects GAIL’s commitment to rewarding shareholders despite a dip in quarterly profits. It also underscores the company’s stable cash flow and conservative capital allocation strategy.

GAIL Share Performance as of 14th May 2025

• Share Price: ₹184.38

• 1-Day Gain: +0.30%

• 52-Week High: ₹188.40

• 52-Week Low: ₹126.10

• 5-Year Return: 212.89%

GAIL has emerged as a consistent performer in the Indian energy sector. Its five-year return of over 212% indicates strong fundamentals, robust asset base, and dependable earnings from regulated and semi-regulated businesses.

Segment-Wise Business Overview

1. Natural Gas Transmission

This segment, the core of GAIL’s operations, saw stable volumes supported by:

• Increased offtake from CGD (City Gas Distribution) players.

• Growing industrial demand.

• New pipeline connectivity to underserved regions.

2. Gas Marketing

Although international LNG prices witnessed volatility, GAIL’s gas marketing business saw improved profitability due to favorable long-term contract realizations and effective price arbitrage.

3. Petrochemicals

Petrochemical margins were under pressure due to global oversupply and subdued polymer demand. However, plant utilization remained stable.

4. LPG and Liquid Hydrocarbons

The segment benefited from higher realizations in domestic LPG sales and increased offtake by the oil marketing companies (OMCs).

Industry Context and Headwinds

The Indian gas industry is going through a phase of rapid infrastructure development, backed by the government’s vision of increasing the share of natural gas in the energy mix to 15% by 2030.

Tailwinds:

• Growing CGD network and household PNG connections.

• Industrial shift from liquid fuels to cleaner natural gas.

• Infrastructure growth under the National Gas Grid.

Headwinds:

• International LNG price volatility.

• Delays in gas sourcing contracts due to geopolitical tension.

• Currency fluctuations affecting import costs.

Despite these headwinds, GAIL’s integrated business model provides a natural hedge against sectoral risks.

Strategic Outlook for FY26

Looking ahead, GAIL is expected to capitalize on India’s natural gas expansion through:

1. New Pipeline Projects: Expansion in South India, Eastern Corridor, and Northeastern India to unlock new markets.

2. CGD Push: Enhanced gas availability for CGD projects where GAIL has ownership and strategic partnerships.

3. Green Hydrogen: Pilot projects launched for hydrogen blending and electrolyzer installations.

4. Diversification: Exploring opportunities in LNG terminals, petrochemical expansion, and gas storage to create long-term value.

Analyst and Market Commentary

Most analysts remain positive on GAIL’s long-term outlook despite the Q4 profit decline.

• ICICI Direct: “GAIL’s core performance remains intact. Maintain BUY with a target of ₹205.”

• HDFC Securities: “Dividend yield and stable gas volume outlook support a HOLD rating. Await margin triggers from petrochemical segment.”

• Motilal Oswal: “Earnings normalized after one-off gain. Focus now on expansion pipeline and green initiatives.”

Final Thoughts

GAIL (India) Ltd.’s Q4 FY25 results reflect a transition from extraordinary profit in the previous quarter to normalized earnings. The 47% decline in net profit was anticipated due to absence of one-time gains, and the company still managed to deliver:

• Revenue growth of 2% QoQ,

• EBITDA increase of 13.3%,

• Improved margins, and

• A modest dividend proposal.

The long-term fundamentals remain strong, supported by government-led energy reforms, infrastructure expansion, and GAIL’s leadership in the Indian gas sector.

For long-term investors, GAIL continues to be a resilient PSU stock offering stability, dividend yield, and moderate capital appreciation potential.

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