Buy Petronet LNG; target of Rs 325: Prabhudas Lilladher

Prabhudas Lilladher's research report on Petronet LNG

We tweak our FY23/24E estimates by ~0.5%, as we incorporate H1 BS. PLNG reported in-line results with EBIDTA and PAT of Rs11.7bn (+10%Q/Q; PLe Rs11.0bn) and Rs7.4bn (+6%Q/Q, PLe Rs7.3bn), as higher margins compensated for lower than expected volumes. Recent softening of spot LNG prices to USD24/mmbtu from Q1 level of USD46/mmbtu augurs well, as spot volumes for H1FY23 were muted at 3tbtu vs 15tbtu in H1FY22. Additionally, the company’s long term contract is best suited in uncertain global economy. We believe PLNG is a formidable play on India’s rising LNG imports, despite rising domestic gas production backed by 1) high earnings visibility and 2) limited competition to its well-entrenched reach in LNG business.

Outlook

Reiterate ‘BUY’ with a DCF based PT of Rs325 (Rs307), as we update our H1FY23 BS.