Buy Petronet LNG target of Rs 330: Sharekhan

Sharekhan's research report on Petronet LNG

Petronet LNG’s (PLNG) Q2 numbers were strong as adjusted PAT grew by 42.5% y-o-y to Rs. 818 crore, above our estimate of Rs. 726 crore. Strong performance was driven by robust volume growth of 13.7% y-o-y to 240 tBtu at Dahej terminal. Completion of Kochi-Mangalore pipeline now expected by December-2019 (versus October-2019 earlier); deal with Tellurian is subject to back-to-back contracts for volume offtake and PLNG would limit its exposure to $500mn-$1bn in the absence of its affiliates. Strong volume-led earnings visibility and superior RoE of ~28-30% make PLNG an attractive investment proposition in the domestic gas utilities space.

Outlook

We maintain a Buy rating on PLNG with revised price target of Rs. 330.