Sell Petronet LNG; target of Rs 266: Prabhudas Lilladher

Prabhudas Lilladher's research report on Petronet LNG

Petronet LNG reported an EBITDA of Rs15.6bn (up 41.6% QoQ, PLe: Rs12.5bn) in Q1FY25, while PAT came in at Rs11.4bn (up 54.8% QoQ, PLe: Rs8.6bn). Beat in estimates was primarily due to inventory/trading gain of Rs3.2bn. Total volume increased 12%/14% QoQ/YoY to 262 TBtu. Dahej terminal’s capacity utilization stood to 109%. The management expects the terminal to continue operating above 100% utilization in Q2 as well. However, we remain negative on the stock given the expensive valuations. The company is also likely to be impacted by competition from upcoming LNG terminals, rising domestic gas supply and underutilization of its Kochi terminal.

Outlook

Additionally, capex on its petrochemical project is likely to be margin dilutive (Link). We maintain ‘Sell’ rating with a TP of Rs266 based on 10x FY26 EPS.