Petronet LNG Q3 Results Review — Nirmal Bang Upgrades The Stock To 'Buy' On Long Term Value

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Nirmal Bang Report

We have raised Petronet LNG Ltd. to 'Buy' post the 12%/16% decline in the stock in the last three months/YTD. This is based on our reduced DCF-based target price (cut by 6.9%) – arrived at after applying a policy discount of 10% on the core DCF value. This Implies FY27E PE of 10.9x versus median PE of 10.0x.

Key catalysts are long term CAGR of 6-7% in Indian gas demand; this will support growth in LNG imports once the ramp-up in KG D6 and KG 98/2 gas production is absorbed. The revival in production form nomination oil blocks of PSUs, and likely softness in LNG prices due to massive increase in global LNG production capacity are added drivers for future LNG import growth.

The low cost Dahej expansion, likely Kochi ramp up, and the added tankages and the third jetty could enhance flexibility to increase spot volumes and also import other feedstock like ethane, and propane.

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