Hold Petronet LNG; target of Rs 311: Prabhudas Lilladher

Prabhudas Lilladher's research report on Petronet LNG

Total volume stood at 220TBtu (Ple 205 TBtu, -16% YoY, +7% QoQ). However, the company took an impairment of Rs1.4bn during the quarter on account of take-or-pay. As a result, despite higher-than-estimated volume, the company reported an in-line EBITDA of Rs11.6bn (Ple Rs11.9bn, BBGe Rs12.6bn, -26% YoY, -23.3% QoQ). PAT came in at Rs8.5bn (Ple Rs8.1bn, BBGe Rs9bn, -25% YoY, - 20.5% QoQ). Concerns remain on utilization of its assets amidst rising competition, especially from the recently commissioned Chhara LNG terminal and completion of breakwater facility at Dabhol LNG terminal. Ongoing capex on petrochemical project is also expected to be ROCE dilutive.

Outlook

We value the stock at Rs311 (previous Target Price Rs315), based on 10x (unchanged) FY27 EPS. Due to the decline in the stock price, we upgrade from ‘Reduce’ to ‘Hold’.