'Buy' This Stock For 17.1% Upside With A Target Price Of Rs. 275, In 1 Year

Target Price

The Current Market Price (CMP) of Petronet LNG is Rs. 235. The brokerage firm has estimated a Target Price for the stock at Rs. 275. The stock is expected to give a 17.1% return, in a Target Period of 12 months.

Company performance

Petronet LNG's standalone adjusted Q2FY22 EBITDA/APAT was at Rs. 13.6bn/Rs8.72bn. Its EBITDA was higher due to an 8%/11% beat in volumes/margins, driven by gross spreads. The Dahej terminal operated at 101% capacity (vs. 93% est), while long-term volumes also rose 15% QoQ to 102tbtu. Adjusted EBITDA/ mmbtu increased by 6% YoY/13% QoQ to Rs. 56.8. However, the company's total volumes dropped by 6% YoY but increased by 15% QoQ.

Comments by Emkay Global

According to Emkay Global, the company's "Volumes are above expectation; valuation is attractive. We cut FY22E EPS by 5% due to the impact of the spot LNG spike, though we raise our FY23-24E EPS marginally. We raise the Dec'22 TP by 2% to Rs. 275 from Rs. 270 as we roll over to Dec'23E from Sep'23E. Maintain Buy but with an OW stance." the firm added, "Key risks are adverse petroleum/gas prices, slowdown, competition and capital mis-allocation."

About the company

The Company had set up South East Asia's first LNG Receiving and Re-gasification Terminal with an original nameplate capacity of 5 MMTPA at Dahej, Gujarat. The capacity of the terminal has been expanded in phases which is currently 15 MMTPA and the same is under expansion to 17.5 MMTPA. The terminal has 6 LNG storage tanks, and other vaporization facilities. The terminal is meeting around 40% of the total gas demand of the country.

Disclaimer

The above stock has been picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.