Hold Petronet LNG; target of Rs 208: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Petronet LNG

Petronet LNG reported an EBITDA of Rs 12.1bn (up 3% QoQ, PLe: Rs 10.5bn) while PAT came in at Rs 8.2 bn (up 4% QoQ, Ple: Rs 6.7 bn). Total volumes at 223 Tbtu were down 3% QoQ but up 15% YoY. Although volumes increased on a YoY basis, long term volume growth prospects remain weak as the company will face competition post commissioning of upcoming LNG terminals and increase in domestic gas supply. The company has cash of Rs 18.2 bn and bank balance of Rs 60.1 bn, and has announced a capex of Rs 206.9 bn on a PDH-PP petrochemical plant.

Outlook

We believe this will stress the company’s balance sheet, and likely reduce its ROCE. Owing to these reasons we change our rating from ‘Buy’ to ‘Hold’ with a TP of Rs 208 based on 11x FY26 P/E.

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Petronet LNG - 31 - 10-2023 - prabhu