GAIL (India) to List City Gas Arm GAIL Gas via IPO; Q2 Net Profit More Than Doubles

State-run GAIL (India) has announced plans to dilute up to a 25 percent stake in its wholly owned subsidiary, GAIL Gas, through an Initial Public Offering expected in FY28. Meanwhile, the company reported a consolidated net profit of ₹4,724 crore for Q2 FY27, supported by growth in its natural gas marketing business.

GAIL (India) has received in-principle approval from its board of directors for the public listing of its city gas distribution (CGD) subsidiary, GAIL Gas (GGL). Under the proposal, the state-run utility plans to dilute up to 25 percent of its equity in the subsidiary through an Initial Public Offering (IPO) on Indian stock exchanges.

According to the company's filing with the BSE, the final extent of dilution, price band, valuation, and other terms and conditions will be determined after GGL submits a final proposal based on recommendations from Book Running Lead Managers (BRLMs). The public offering is expected to be launched in FY28. GAIL Gas is currently implementing CGD projects across 16 Geographical Areas, alongside operations in Andhra Pradesh, Rajasthan, Vadodara, Haridwar, North Goa, and Assam through joint ventures.

Alongside the IPO announcement, GAIL reported a significant increase in its financial performance for the second quarter of FY27. The company's consolidated net profit more than doubled year-on-year to approximately ₹4,724 crore in Q2 FY27, compared to ₹1,989 crore recorded in the corresponding quarter of the previous year. In Q1 FY27, the company reported a net profit of ₹4,671 crore.

Consolidated total income for Q2 FY27 rose to ₹47,474 crore, up from ₹41,483 crore in Q1 FY27 and ₹35,894 crore in Q2 FY26. Total expenses for the quarter increased to ₹41,645 crore, compared to ₹35,558 crore in the preceding quarter and ₹33,608 crore in Q2 FY26.

GAIL noted that the quarter demonstrated operational resilience in its transmission and natural gas marketing segments despite ongoing geopolitical headwinds. Natural gas transmission volume reached 130.10 million standard cubic meters per day (mscmd) during Q2 FY27, compared to 122.36 mscmd a year earlier. Gas marketing volume rose to 97.23 mscmd from 93.82 mscmd, while LPG transmission volume stood at 1,130 thousand tonnes against 1,077 thousand tonnes.

Deepak Gupta, CMD of GAIL (India), stated that operational teams maintained agility to ensure uninterrupted supplies and meet customer requirements despite prevailing headwinds. He emphasized that the company remains focused on enhancing operational efficiency, strengthening business resilience, and creating sustainable long-term value for stakeholders.

The company reported a cumulative capital expenditure of ₹7,600 crore in H1 FY27, which includes ₹1,425 crore incurred during Q2 FY27, against an annual planned capex of approximately ₹12,900 crore.

Addressing supply chain challenges, GAIL highlighted that LNG supplies from the Middle East have faced disruptions since March 2026 due to the geopolitical situation in West Asia. Following a force majeure declared by Petronet LNG on March 3, 2026, RLNG allocation under the contract was reduced to zero. However, the company has implemented mitigation measures, including procuring natural gas from the spot market and alternative sources, to minimize the impact.

"The decision by GAIL to list its city gas distribution arm, GAIL Gas, highlights a strategic approach to unlocking subsidiary value through public markets while maintaining core utility operations. Despite external geopolitical pressures and supply chain disruptions in West Asia, the company's financial results demonstrate strong revenue performance and operational resilience. For the broader market, unlocking value in specialized segments like city gas distribution through dedicated listings offers a clear roadmap for capital efficiency and growth in India's energy sector." — Dr. Shishir Gupta, Founder & CEO, StartupLanes