Buy Petronet LNG: Target Of Rs 300: Sharekhan
Sharekhan is bullish on Petronet LNG recommended buy rating on the stock with a target price of Rs 300 in its research report dated November 12, 2020.
Nov 15, 2020 / 11:30 AM IST
Sharekhan's research repor on Petronet LNG
Q2FY2021 results were strong with operating profit/adjusted PAT of Rs. 1,363 crore/Rs. 862 crore, up 17.5%/5.3% y-o-y and beat of 20%/23% versus our estimate of Rs. 1,132 crore/Rs. 700 crore. Earnings beat estimates as Dahej re-gas volume exceeded hopes at 243tbtu (up 1.3% y-o-y), lower other expenses and higher other income. Strong volume visibility with Dahej terminal operating above pre-COVID levels and potential ramp-up in Kochi terminal’s utilisation to 20-25% by Q4FY2021. PLNG provides a high degree of earnings visibility (expect a 12% CAGR over FY21E-FY23E) with a RoE of 28% in these uncertain times. A rising share of LNG in India’s gas consumption bodes well for long-term volume growth. Valuation is attractive at 9.8x its FY2023E EPS (19% discount to its historical PE multiple) despite strong earnings visibility, high RoE and FCF/dividend yield of 9%/6%.
Hence, we maintain our Buy rating on Petronet LNG with an unchanged PT of Rs. 300.
For all recommendations report, click here
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