Higher LNG prices better for GAIL outlook; other businesses appear strong

Prospects across segments stay positive

Shares of Gas Authority of India or GAIL have recovered 12 per cent in the past few weeks, after falling almost 20 per cent from December highs, as concerns over its profitability are easing. Moreover, with its other business segments doing well and valuations now favourable, analysts see more gains for the stock.

Worries over the start of take-or-pay, high-priced gas import contracts, which were affecting GAIL's profitability, had led to the stock's fall in the past few months. However, spot prices of liquefied natural gas (LNG) have been rising now, narrowing the gap between imported and domestically sourced gas.