Sharekhan has given Buy recommendation for Petronet LNG with a target price of Rs. 285 in its research report issued on Jun 09, 2021
Sharekhan’s research report on Petronet LNG
In-line operating profit at Rs. 1,091 crore (up 20.4% y-o-y) as volume of 218 tbtu meets our expectation. Adjusted PAT at Rs. 674 crore (up 20.6% y-o-y), marginally below our estimate due to lower other income. Near-tern volume outlook remain muted due to lockdown, high spot LNG price and ramp-up of domestic gas production. Kochi terminal utilisation ramp-up expected to reach 30% (from 22% in Q4FY21) in the next six months. Massive capex plan of Rs. 18,000 crore over the next five years with 66% spending on new unestablished avenues such as LNG retailing stations (Rs. 8,000 crore) and compressed bio-gas plants (Rs. 4,000 crore), while benefits would be back-ended and could impact dividend payout going forward.
Outlook
However, valuation remains attractive at 9.7x its FY2023E EPS; and thus, we maintain our Buy rating on PLNG with a revised PT to Rs. 285 (lowered to reflect cut in earnings estimate given lower volume assumption).