Motilal Oswal has given Buy recommendation for Petronet LNG recommended buy rating on the stock with a target price of Rs 300 in its research rep with a target price of Rs. 300 in its research report issued on Nov 10, 2021

Motilal Oswal’s research report on Petronet LNG

Petronet LNG (PLNG) reported a beat on our estimates, led by higher-than-estimated throughput (Dahej back at >100% at 102%, after being subdued for the last three quarters, with Kochi utilization robust at ~24%). The company expects spot LNG prices to cool off post the winter season. Currently, huge demand is seen from China and Japan, with supply constraints resulting in a spike in spot LNG prices. Despite the immediate challenges, the management remains confident about achieving >900tbtu in volumes for FY22 (~96% utilization, i.e., flat YoY – supported by tied up contracts). Our numbers are in line with the aforementioned guidance, with the full-year volume assumption at 910tbtu. Company is also looking at extending its long term contract with RasGas beyond 2028.

Outlook

The stock trades at 10.7x FY23E EPS and 6.1x FY23E EV/EBITDA. We value PLNG on a DCF basis to arrive at a fair value of INR300. Maintain Buy.

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