GAIL Plans 85 New CNG Stations Despite Weak Q3 Results

Gas Authority of India Limited (GAIL) has outlined an expansion push for its city gas footprint, even as it reported a sharp drop in profit for the December quarter.

The state-owned gas major said it plans to add 85 new compressed natural gas stations over the next two years while maintaining confidence in volumes and softer global gas prices going ahead.

The update came during an analyst call following the company’s Q3 FY26 earnings, where management also shared guidance on transmission volumes, capital expenditure and sourcing plans. With profitability under pressure in the near term, how is GAIL positioning itself for growth over the next few years?

How Does GAIL Plan to Scale Its CNG and Pipeline Footprint?

Speaking to analysts, Rakesh Kumar Jain, current Director for Finance at GAIL, said the company is targeting the addition of 85 CNG stations in the next two years, reinforcing its focus on city gas distribution and cleaner fuel adoption.

On the core transmission business, GAIL expects gas transmission volumes to scale up to 134-135 million standard cubic metres per day in FY27. For the current financial year, the company remains confident of closing with volumes of 124-125 MSCMD, indicating steady utilisation across its pipeline network.

In addition, GAIL said it is actively considering participation in bidding for new petroleum and petroleum product pipelines, with a particular focus on LPG pipelines. As of the end of the December quarter, GAIL’s natural gas pipeline network had crossed 18,000 kilometres, underlining its scale in gas transmission.

The company also shared that its natural gas marketing segment is expected to handle volumes of 109-110 MSCMD in the coming financial year, reflecting gradual demand growth across industrial, city gas and power segments.

How Is GAIL Viewing Gas Supply, Capex and Sourcing?

Addressing concerns around global gas availability, management said the supply outlook is improving. Mr Jain noted that global gas supply is expected to be abundant from the coming financial year, with several new capacities coming on stream. This, he said, is already leading to softer prices, which could support higher gas consumption in India’s price-sensitive market.

GAIL also indicated that it is seeing competitive offers in the global market, which may further aid sourcing flexibility and demand growth. Over the longer term, the company aspires to increase gas sourcing by 6-7 million tonnes per annum by 2030, from about 17 MTPA currently, subject to demand visibility.

On investments, the company expects to incur ₹9,000-10,000 crore of capital expenditure in the upcoming financial year, excluding any new projects that may be taken up later. Management said decisions on additional sourcing and investments would be aligned with emerging demand trends.

What Do GAIL’s Q3 Results Mean for Investors Going Ahead?

With the immediate earnings picture in view, the next question is how these plans shape the road ahead.

For the quarter ended 31 December 2025, GAIL reported a 57.6% year-on-year fall in net profit to ₹1,729.13 crore, compared with ₹4,084.24 crore in the same period last year. Revenue from operations declined 4.4% to ₹35,302.7 crore, while total expenses stood at ₹33,821.4 crore.

The operating margin decreased to 4.71% in Q3 FY26 from 5.75% a year earlier and 6.47% in the September quarter, indicating a softening in operating performance. In spite of this, the business declared an interim dividend for FY26 of ₹5 per equity share, with the record date being February 5.

For investors, the near-term outlook indicates pressure on profitability, even as management commentary points to increasing volume visibility, reducing gas prices and a steady construction of downstream infrastructure. Going ahead, the focus will be on how quickly volumes pick up, how capex plans are rolled out, and how global gas prices affect demand in India.

Sources:

The Hindu

Mint