Sharekhan is bullish on Petronet LNG has recommended buy rating on the stock with a target price of Rs 345 in its research report dated February 11, 2020.
Sharekhan's research report on Petronet LNG
Petronet LNG’s (PLNG’s) Q3FY2020 adjusted operating profit of Rs. 988 crore (up 16.4% y-o-y; down 5.6% q-o-q) was below our estimate due to a miss in Dahej volume at 222 tBtu (up 12.7% y-o-y). Adjusted PAT at Rs. 730 crore (up 29.1% y-o-y; down 10.8% q-o-q), exceeded our estimates of Rs. 649 crore. Work on the Kochi-Mangalore pipeline is on track and the pipeline is likely to get commissioned by March 2020. Ramp-up of Kochi terminal’s utilisation rate and further capacity expansion at Dahej to 19.5 mmt would drive volume growth over next couple of years. PLNG’s valuation of 11x FY2022E EPS seems attractive, given a strong volume-led earnings growth visibility (we expect an EBITDA/PAT CAGR of 13%/8% over FY2020E-FY2022E) and robust RoE of 29-30%.
We maintain a Buy rating on PLNG with unchanged price target of Rs. 345.
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