Buy Petronet LNG; target of Rs 305: Motilal Oswal

Motilal Oswal's research report on Petronet LNG

PLNG reported 1QFY20 results based on Ind-AS 116. Reported EBIDTA came in 17% higher than our estimate at INR10.2b (+10% YoY), led by lower other expenditure under the new accounting standards. Depreciation stood at INR1.9b (+86% YoY) and interest cost at INR1.0b (~3-4x). Reported PBT of INR8.4b was in line with our estimate. Adjusting for Ind-AS loss of INR516m, PBT was 3% above our estimate at INR8.9b. PAT was in line with our estimate at INR5.6b (-5% YoY, +27% QoQ).

Outlook

We expect EBITDA growth of ~27%/16% in FY20/21. The stock trades at 15.0x FY20E EPS of INR16.0. We value PLNG on DCF (WACC: 12.0%, TGR: 3%) to arrive at a fair value of INR305, implying an upside of 27%. Reiterate Buy.