HomeNewsBusinessStocksBuy Petronet LNG; target of Rs 300: Motilal Oswal
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Buy Petronet LNG; target of Rs 300: Motilal Oswal

Motilal Oswal is bullish on Petronet LNG recommended buy rating on the stock with a target price of Rs 300 in its research report dated November 10, 2021.

Broker Research
November 11, 2021 / 14:40 IST
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HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."
HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

Motilal Oswal's research report on Petronet LNG

Petronet LNG (PLNG) reported a beat on our estimates, led by higher-than-estimated throughput (Dahej back at >100% at 102%, after being subdued for the last three quarters, with Kochi utilization robust at ~24%). The company expects spot LNG prices to cool off post the winter season. Currently, huge demand is seen from China and Japan, with supply constraints resulting in a spike in spot LNG prices. Despite the immediate challenges, the management remains confident about achieving >900tbtu in volumes for FY22 (~96% utilization, i.e., flat YoY - supported by tied up contracts). Our numbers are in line with the aforementioned guidance, with the full-year volume assumption at 910tbtu. Company is also looking at extending its long term contract with RasGas beyond 2028.

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Outlook

The stock trades at 10.7x FY23E EPS and 6.1x FY23E EV/EBITDA. We value PLNG on a DCF basis to arrive at a fair value of INR300. Maintain Buy.

For all recommendations report, click here

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