January 03, 2017 / 17:27 IST
Motilal Oswal's research report on Petronet LNG
Spot LNG prices in Asia-Pacific increased from USD 4.2/mmbtu in May 2016 to USD8.0 in December 2016 and as much as USD9.2 for February delivery. As a result, LNG import in November declined to 1.5mmt, 5% below monthly import in 1HFY17. However, import in November was still 15% higher YoY. Consequently, Petronet’s stock price has declined 8% this month. However, we believe that LNG prices would correct soon, and see the recent sharp fall in the stock price as an excellent investment opportunity.
Outlook
We value Petronet using DCF and a WACC of 12%. With a target price of INR 411, we have a Buy rating on the stock.
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