UBS upgrades Petronet LNG to 'buy' on positive growth outlook, sees 20% upside

Petronet LNG reported a 4.17 percent YoY increase in consolidated net profit at Rs 849 crore for Q2.

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Gas distributer Petronet LNG shares will be in focus on December 2, after international brokerage UBS upgraded its rating on the Oil & Gas player.

The brokerage upgraded its rating on the Petronet LNG to 'buy' from 'neutral', while upping its target price to Rs 400 per share, from Rs 320 earlier. This implies a potential 20 percent upside from the previous close.

According to the brokerage, the firm is a beneficiary of India's increasing LNG dependance. Further, it is focusing on expanding capacity at a time when the country needs more LNG. India has secured 5 long-term LNG supply contracts, starting 2026.

The firm's Dahej terminal could handle 19-20 mmtpa LNG, despite intensifying competition.

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For the quarter ended September, Petronet LNG reported a 4.17 percent year-on-year increase in consolidated net profit at Rs 849 crore. The gas distributer reported a consolidated net profit of Rs 815 crore in the same period a year ago. Sequentially, net profit was down 23 percent.

Revenue from operations came in at Rs 13,024 crore, a marginal increase from Rs 12,532 crore in the year-ago period.

The overall LNG volume processed by the company in the current quarter was 239 TBTU, as against the LNG volume processed in the corresponding and previous quarters, which stood at 223 TBTU and 262 TBTU, respectively.

During the half year ended September 30, Dahej terminal processed highest-ever 473 TBTU of LNG as against 428 TBTU during the corresponding period last year. The company processed 501 TBTU LNG in the first half of the current financial year, as against 453 TBTU last year.

Over the past year, shares of Petronet LNG have jumped 64 percent as against 16.7 percent rise in the Nifty 50 during the same time period.

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