Reduce Petronet LNG; target of Rs 243: HDFC Securities

HDFC Securities' research report on Petronet LNG

Our REDUCE recommendation on Petronet LNG (PLNG) with a TP of INR 243 is based on: (1) the adverse impact of high spot LNG price and (2) rising domestic gas production on spot LNG demand in the medium term. In Q1, reported EBITDA was at INR 12bn (+11% YoY, +25% QoQ) while PAT came in at INR 8bn (+13% YoY, +29% QoQ), above our estimates, driven by the higherthan-expected volume of 230tbtu (+11% YoY, +24% QoQ) and lower other expenses.

Outlook

Our TP of INR 243 is based on Sep-24E cash flow (WACC 12%, terminal growth rate 3%). The stock is trading at 14x Sep-24E EPS.