Petronet LNG - Good Performance Aided By Higher Margins, Volumes; Retaining A Hold: Anand Rathi

Anand Rathi Report

With a unique and risk-free business model, Petronet LNG Ltd. has long-term contracts and revenue from re-gasification margins on imported LNG. The Dahej expansion (two storage tanks, a jetty) and an east-coast terminal would help it retain a good proportion of India’s LNG imports.

Ahead, the lower spot LNG price of ~$12/m Btu would drive re-gas volumes. Its plans, however, to diversify to a non-related petrochemicals business appears negative.

We retain our estimates and Hold recommendation, with a 12-mpnth target price of Rs 348 (Rs 328 earlier), 7.5 times FY26E enterprise value/Ebitda (seven times earlier) and deduct Rs 42/share for the equity contribution to the petchem business.

Risks:

Steep rise in LNG prices, slower expansion, sharp rise in domestic gas production, lower peer tariffs.

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