Motilal Oswal is bullish on Petronet LNG has recommended buy rating on the stock with a target price of Rs 300 in its research report dated May 16, 2019.
Motilal Oswal's research report on Petronet LNG
4QFY19 PAT missed est. by 21% at INR4.4b (-16% YoY, -22% QoQ), while EBIDTA too missed est. by ~27% at INR6.3b (-24% YoY, -26% QoQ), led by inventory markdown of INR1,190m. Spot LNG price for PLNG declined to USD4.3/mmbtu from USD8.3/mmbtu leading to inventory loss. 4QFY19 volumes were ~2% lower than est. at 205.1tbtu (-4% YoY, +1% QoQ), while FY19 volumes were at ~844tbtu (v/s 847tbtu in FY18). Volume loss was a seasonal effect due to shutdown of (a) refineries at Panipat and Koyali, (b) fertilizer plants. For the quarter, utilization at Dahej stood at 104% (108% in FY19; flat YoY in FY18); while utilization at Kochi increased to 11% (10% in FY19; 12% in FY18).
The stock trades at 12.1x FY20E EPS of INR18.5. Modeling in capex guidance of INR6b for FY20 in line with the company's guidance, we value PLNG on DCF (WACC: 12.0%, TGR: 3%) to arrive at fair value of INR300 (from INR315). Reiterate Buy, with an implied upside of ~34% to the current market price.
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