Motilal Oswal has given Buy recommendation for Petronet LNG recommended buy rating on the stock with a target price of Rs 310 in its research with a target price of Rs. 310 in its research report issued on Jun 10, 2021

Motilal Oswal’s research report on Petronet LNG

PLNG numbers were largely in line with our estimate, with volumes (at 218Tbtu) and utilization rates (Dahej/Kochi at 92%/22%) flat YoY in 4QFY21. The second COVID wave and higher spot LNG prices have proved to be a double whammy for the company, with spot cargoes being deferred due to lower consumption. Dahej/Kochi is operating at a utilization rate of ~88%/~22% in 1QFY22 till date. The management expects Kochi utilization rate to ramp up by ~30% by the end of FY22 (earlier guidance of ~40%), while Dahej would continue to operate at over 95% owing to tied up contracts (16.5mmtpa of 17.5mmtpa).

Outlook

The stock trades at 9.8x FY23E EPS of INR23.4 and 5.6x FY23E EV/EBITDA. We value PLNG on a DCF basis to arrive at a fair value of INR310. Reiterate Buy.