Synopsis:
Petronet LNG is in focus as Motilal Oswal expects a potential upside of 42% from its current price, citing in-line performance with its estimates, overall volumes remain robust and better placed as compared to its peers on pricing.
With a market capitalization of Rs 43,140 crores, the shares of Petronet LNG Ltd are currently trading at Rs 288 per share, representing a 25 percent decline from its 52-week high of Rs 384.90 per share. Over the past five years, the stock has delivered a poor return of 16 percent.
Leading brokerage house Motilal Oswal has initiated a Buy call on this stock and assigned a price target of Rs 410 per share, signaling an upside potential of 42 percent from its current market price of Rs 288 per share.
The brokerage cited that Petronet LNG (PLNG) had a solid start to Q1 FY26, even though it faced some hurdles like low spot demand due to weak power offtake. While EBITDA came in just short of expectations, the overall volumes remained robust, all because of long-term contracts and service cargoes.
The Dahej terminal performed better than anticipated, and the profit after tax (PAT) met forecasts, bolstered by an increase in other income. Most importantly, the company continues to demonstrate strong cash flow and operational resilience, even with no spot volumes this quarter.
It also added that Dahej’s capex per mmtpa is around Rs 500 crore, which is almost half of its competitors, typically between Rs 900 to 1,100 crore. This makes Dahej the most cost-effective and scalable option out there. Meanwhile, competitors are only running at 14 to 43 percent of their capacity. With PLNG’s superior connectivity and larger scale, it’s clearly in a much stronger position.
Financial Highlights
The company reported a revenue of Rs 11,880 crores in Q1 FY26, down by 11.44 percent from its Q1 FY25 revenue of Rs 13,415 crores. Additionally, the company reported a net profit decrease of 24 percent to Rs 842 crore in Q1 FY26 from Rs 1,105 crore in Q1 FY25.
The stock delivered an ROE and ROCE of 21.31 percent and 25.57 percent respectively, and is currently trading at a P/E of 11.63x as compared to its industry average of 18.56x.
Petronet LNG Limited imports, stores, regasifies, and supplies liquefied natural gas (LNG) in India. The company serves a diverse group of clients, including oil and gas companies, petrochemical firms, city gas distributors, refineries, fertilizer producers, power plants, and other industrial users.
Written by Satyajeet Mukherjee
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