Petronet LNG Q4 Results Review: One-Off Gains Offset Hit On LNG Volume; Nirmal Bang Maintains 'Buy', Hikes TP

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Nirmal Bang Report

We maintain Buy post the 8.5% year-to-date decline in Petronet LNG Ltd. This is on account of our raised DCF-based target price (up 6.3%), which is arrived at after applying a reduced policy discount of 5% (vs 10% earlier on easing policy worries) on the core DCF value.

This Implies FY27E P/E of 10.9x vs. median P/E of 10.1x.

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 from nomination oil blocks of PSUs, and likely softness in LNG prices due to massive increase in global LNG production capacity are key drivers for future gas demand/LNG import growth.

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

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