Hold Petronet LNG; target of Rs 210: ICICI Securities

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26 Aug, 2025 12:21

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Petronet LNG (PLNG) reported a 4% YoY improvement in EBITDA to INR 12.1bn and a 10% YoY rise in PAT to INR 8.2bn, up 3/4% QoQ. Management has raised the estimated investment on the PDHPP plant (nameplate capacity of ~0.75mtpa of PDH, split into 0.25kt of Propylene, 0.5mt of Polypropylene) at an investment of INR 210bn. This is way higher than the earlier indicative investment of INR 140bn (attributed to ethane handling facility and some costs not disclosed earlier). We confess that we struggle to understand the basis for management assertion that this is a 20% IRR project – our assessment of rough cut numbers indicates a much lower return profile for the project, underpinning our reiteration of HOLD despite low valuations, recent underperformance, steady EPS growth and high dividend yields.

All of this, however, gets counterbalanced by what looks to us as a risky bet on diversification at a scale at which PLNG has not operated before. Reiterate HOLD with a revised TP of INR 210/share.

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