Sell Petronet LNG; target of Rs 185: Kotak Securities

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26 Aug, 2025 12:21

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Kotak Securities research report on Petronet LNG“We believe the major headwind for PLNG in the short to medium term is the delay in setting up of the natural gas pipeline by GAIL from Kochi RLNG terminal (Nameplate capacity of 5 MMTPA). The next phase of growth was expected to come from Kochi terminal but the same is delayed by minimum two to three years. In fact, the Company's management has highlighted that Kochi plant will incur a loss of ~Rs.5 Bn annually, if the plant operates at current level of ~1%. On the other hand, Dahej RLNG terminal is already operating around 110% capacity hence we do not expect any major volumes growth from Dahej terminal in FY15E. Supreme Court's hearing in the case of IGL and PNRGB is due on 23th Sep'14. Any adverse judgment on capping of industry margins may indirectly impact PLNG also, we opine.” “On the basis of our estimates, the stock at current market price of Rs.200 is fully valued at 9.4x EV/EBIDTA, 16.6x P/E, 11.6x P/CEPS and 2.39x P/BV on FY16E earnings. Recent run-up in the stock price discounts most of the positives, we opine. We recommend SELL (earlier REDUCE) rating on PLNG with a revised price target of Rs.185 (earlier Rs.171). We recommend investors to look for better entry point, noting 42% outperformance versus NSE-Nifty over the past seven months, which leaves limited headroom to absorb any disappointment on long-term utilization of Kochi terminal. We remain watchful on the potential development of Kochi-Bangalore-Mangalore off-take pipeline, which is crucial for long-term utilization of the Kochi terminal,” says Kotak Securities research report. 

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