Motilal Oswal's research report on Petronet LNG
During 9MFY23, PLNG’s throughput declined 14% YoY, due to record-high LNG prices, driven by Russia-Ukraine crisis. LNG prices have now cooled off to ~USD12/mmBtu, which should lead to improvement in utilization levels in the near term. However, long-term growth challenges persist, due to 25% increase in domestic gas supply next year and 86% increase in LNG terming capacity over the next few years. Additionally, the sustainability of the company’s high return ratios is a concern since ROCE for upcoming projects (Dahej expansion, Gopalpur FSRU and PDH-PP plant) is expected to be comparatively lower at 7-18%. Hence, we reiterate our neutral rating on the stock with a TP of INR210.
Outlook
The company currently trades at 11.9x FY25 EPS of INR18.7. We value the company at 11x FY25 EPS of INR19.1 to arrive at our TP of INR210 and reiterate our Neutral rating.
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