Gail's valuation looks attractive, but West Asia conflict weighs

Gail (India) Ltd’s shares have declined about 12% since the conflict in West Asia began, hitting 52-week low of ₹144.50 on Monday. The Strait of Hormuz blockade and QatarEnergy's suspension of operations at its LNG plant would hit Gail’s transmission and marketing businesses.As per Elara Capital, the state-owned company transported 123 million standard cubic meter (mmscmd) of natural gas in 2025, and about 30% of it came from sources that pass through or are close to the Strait and are stalled currently.The marketing segment traded volume of 105 mmscmd in 2025, and its dependency is less at 16%, thanks to diversified contracts from the US, Russia, and Australia.

The segment should also gain from higher spreads in US LNG contracts, as procurement prices are largely stable given adequate supplies, while the natural gas selling price has spiked in India. Gail procures 5.8 million tonnes per annum of LNG, or about 7.7 mmscmd of natural gas from the US.Transmission and marketing contributed about 56% and 42% of Gail’s Ebit (earnings before interest and taxes) for the nine months ended December (9MFY26), respectively.

While LPG & liquid hydrocarbon, LPG transmission, and other segments collectively contributed about 15% of Gail’s 9MFY26 Ebit, it was offset by losses in the petrochemicals segment.Soft petchem prices meant the segment made a loss of over ₹1,000 crore at Ebit level for 9MFY26, against ₹94 crore profit in 9MFY25. The segment would be hit to some extent by the Indian government’s recent order that has curtailed supply to industrial sectors such as petchem, power, to ensure adequate supplies to household and other essential segments.