Sharekhan is bullish on Petronet LNG has recommended buy rating on the stock with a target price of Rs 300 in its research report dated June 30, 2020.
Sharekhan's research report on Petronet LNG
Petronet LNG’s (PLNG) Q4FY2020 adjusted operating profit of Rs. 907 crore (up 44.5% y-o-y; down 8.2% q-o-q) was below estimates, given lower margin on spot volume. In-line Dahej volume at 206 tBtu (down 7.2% q-o-q); Kochi utilisation improved to 20% in Q4FY2020. Sustained high Dahej terminal utilisation (recovered to 100% in June 2020), potential ramp-up of Kochi terminal utilisation in H2FY2021E (as Kochi-Mangaluru pipeline is nearing completion) and likely rise in LNG demand provide earnings visibility. PLNG’s valuation at 11.2x its FY2022E EPS seems attractive given earnings growth visibility (expect a 10% PAT CAGR over FY2020-FY2022E), strong RoE of 29%, dividend yield of 5-6%, and FCF yield of 6-7% in FY2022E.
Hence, we maintain our Buy rating on PLNG with an unchanged price target (PT) of Rs. 300.
For all recommendations report, click here
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