Buy Petronet LNG; target of Rs 285: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Petronet LNG

Q3FY22 adjusted PAT of Rs. 892 crore (up 10% y-o-y) was 25% above our estimate led by higher trading margin and inventory gain which offsets weak re-gas volume of 208 tbtu (down 11% y-o-y). Reported PAT of Rs. 1,144 crore (up 30% y-o-y) has a benefit of Rs. 348 crore related to “Use or Pay charges”. Dahej re-gas volumes declined by 11.7% y-o-y to 196 tbtu (utilization of 87.9%) and Kochi re-gas volume declined by 20% q-o-q to 12 tbtu (utilisation of 18.8%). Weak volumes were a result of elevated spot LNG prices ( $25-26/mmBtu currently). Use or Pay charges” of Rs. 348 crore reflect P-LNG’s ability to protect earnings if customers offtake volume below contractual agreement and the same re-enforces confidence on earnings visibility for P-LNG. Dahej expansion projects on track and to be completed in next three years.

Outlook

Valuation is attractive at 9.3x/8.5x its FY23E/FY24E EPS, given earnings visibility, high RoE, and FCF/dividend yield of 9%/6%. Hence, we maintain a Buy on Petronet LNG with an unchanged PT of Rs. 285.

More Info on Petronet LNG

At 15:50 hrs Petronet LNG was quoting at Rs 216.20, down Rs 1.85, or 0.85 percent.

It has touched an intraday high of Rs 218.70 and an intraday low of Rs 214.55.

It was trading with volumes of 73,335 shares, compared to its thirty day average of 93,501 shares, a decrease of -21.57 percent.

In the previous trading session, the share closed up 0.95 percent or Rs 2.05 at Rs 218.05.

The share touched its 52-week high Rs 260.90 and 52-week low Rs 206.70 on 25 February, 2021 and 25 January, 2022, respectively.

Currently, it is trading 17.13 percent below its 52-week high and 4.6 percent above its 52-week low.

Market capitalisation stands at Rs 32,430.00 crore.

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