Hold Petronet LNG; target of Rs 431: Edelweiss

Edelweiss' research report on Petronet LNG

Petronet LNG (PLNG) reported robust Q4FY17 operational performance with EBITDA at INR7bn (up 16% QoQ, 42% YoY) surpassing estimate by 14%. While overall volumes, at 3.5MMT, came broadly in line, the surge in trading margin led to earnings beat. Dahej terminal’s utilisation, as expected, fell to 91% from 96% in Q3FY17.

Outlook

While LNG demand will remain robust, we estimate earnings growth to moderate—12% EPS CAGR over FY17-19—given lower capacity addition. Moreover, rising competitive intensity could pose risk to regas margin in the long term. Ergo, we maintain ‘HOLD’ with target price of INR 431.