Petronet LNG reported its March quarter scorecard on May 11 which received a positive review from the Brokerage firm Motilal Oswal Financial Services as the brokerage sees an up to 42 percent upside in the stock's price from the current levels.
Motilal Oswal has a 'buy' call on the stock with a target price of ₹300. The stock is 16 percent below its 52-week high of ₹252.10 that it hit on June 8, 2021, on BSE.
Petronet reported a beat in absolute terms, even as operational numbers were below our Q4FY22 estimates. Throughput at Dahej stood at 80 percent, with the utilization of nearly 19 percent at Kochi.
"Despite the challenges, we remain confident that the company will see the utilization of 105%/30% in FY23E. Spot LNG prices fell to $24.5/mmBtu in Apr’22 against $29.4/mmBtu in Q3FY22 and $35.4/mmBtu in Mar’22," said Motilal Oswal.
The brokerage firm has revisedd its FY22 and FY23 revenue estimate upward by 15% and 14%, respectively, led by higher LNG prices.
"The stock trades at 8.9 times FY24E EPS and 5.1 times FY24E EV/EBITDA. We retain our EBITDA and PAT CAGR of 3 percent each over FY22-24 and maintain our 'buy' rating," Motilal Oswal.
Motilal Oswal is positive on the gas story in India, which is set to clock 6-8 percent CAGR as per our gas demand-supply model, led by: (a) the development of new CGDs, and (b) higher consumption by fertilizer and refining and petchem plants.
As highlighted by the brokerage firm, the company will set up a petrochemical project, where it will produce PDH-PP (capacity of 500ktpa) and another product as guided in Q3FY22. It will also set up two new tanks at Dahej at a capex of ₹1,200 crore by CY24.
Market sentiment on the stock is ‘neutral’, according to a MintGenie poll and an average of 32 analysts has a ‘buy’ call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies and not of MintGenie.