Buy Petronet LNG; target of Rs 170: Microsec
Microsec is bullish on Petronet LNG (PLNG) and has recommended buy rating on the stock with a target price of Rs 170 in its March 08, 2013 research report.
March 11, 2013 / 12:10 IST
Microsec is bullish on Petronet LNG (PLNG) and has recommended buy rating on the stock with a target price of Rs 170 in its March 08, 2013 research report.
"PLNG, commissioning of Kochi Terminal by Q1FY14 is the immediate biggest trigger for the company. Kochi Terminal with a capacity of 5mmtpa ensures to meet the increasing demand of natural gas for Power, Petrochemicals Fertilizers and various other industries. The pipeline will connect Kochi to Bengaluru and Mangalore and in that regards the fertilizers, petrochemicals and other industries across the southern region will be the key beneficiaries. Initially the ramp up of the terminal will be slower however it will elevate its pace gradually.Petronet LNG poised to be the biggest player in Indian LNG business: Dahej LNG Terminal is the South EastAsia’s first LNG receiving and regasification terminal with an original capacity of 5mmtpa and later the company had doubled the capacity to 10mmtpa. It has a further capacity expansion plan of 5mmtpa over the next few years. Currently the terminal is utilising at 110% of its capacity and the trend is likely to continue in the future.Capacity booked will de-leverage by providing better revenue visibility: PLL recently signed a contract with GSPC of 2.25mtpa on a long term and firm basis will provide better long term revenue visibility. Post the completion of second jetty a capacity of 1.25mmt would be obtainable from the Dahej terminal while the remaining 1 mmt of the booked capacity would be made available from the Dahej expansion. PLL also signed a take or pay contract for 2.5mmtpa of the 5mmtpa Dahej expansion with GAIL These contracts enables Petronet LNG to cover around ~80% of the expanded 15mmtpa capacity of the Dahej terminal.Expansion to boost financials: Expansion to aid financials in the future course of time as it is estimated that PetronetLNG may command a healthy CAGR of ~16% in the topline while a CAGR of ~20% for FY13E-FY17E.Valuation: We value the company on a Discounted Cash Flow (DCF) basis, assigned a WACC of 9.68percent (%) and assumed a terminal growth rate of 3percent (%). Our DCF based price target is INR170.19 which shows an upside potential of 17pecent (%) from the current market price of INR145.40. Hence we recommend a Buy for the stock from longterm perspective," says Microsec research report.Non-Institutions holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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