Petronet LNG is investing Rs 20 billion on the 2.5 km stretched third jetty which is likely to be commissioned by March 2027. With the increment capex of just Rs 1-1.5 billion, this will be equipped with propane and Ethane unloading arms. Petronet LNG is eyeing to sale 0.3 mtpa of propane (captive consumption of 0.9mtpa) and 1.2 mtpa of ethane which would add to its growth.
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Systematix Report
Recently, Indian companies like GAIL India Ltd. and Indial Oil Corporation Ltd. have entered into a long-term contract of ~7 mtpa which is likely to be delivered from FY27.
Further, last stretch of Mangalore-Bangalore pipeline is expected to commission by end-FY26 which would augment the volume at Kochi. Also the company is looking for bunkering option over there.
Overall, based on the competition we may not see a sharp cut in tariff and may be boosted by higher tie-ups at Dahej. The stock is trading very reasonable at 9.5x on FY27 with RoE/RoCE of 18%/17%.
We raise our PER multiple to 12x from earlier 11x on the back of better visibility on projects.
Therefore, we raise our target price to Rs 348 from earlier Rs 319 on unchanged earnings estimates. We upgrade the stock to Buy from earlier Hold.
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Also Read: ICICI Securities Maintains 'Buy' On Sun TV Shares On Inexpensive Valuations; Sees 29% Upside
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