Petronet LNG Upgraded To 'Buy' By Motilal Oswal — Here's Why

Petronet LNG trades at 9.6x FY27 EPS, compared to its historical one-year forward P/E of 10.4x. Under a variety of bearish scenarios, the brokerage's DCF-based valuation implies -4% to 21% upside from the current price..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.We upgrade Petronet LNG Ltd. to Buy with a DCF-based target price of Rs 410/share. According to our DCF analysis (WACC: 11.2%), at current market price, Petronet LNG is pricing in an unrealistic scenario of a 20% decline in tariff at both the Dahej and Kochi terminals in FY28 with no tariff hike thereafter, and 0% terminal growth. Additionally, the street narrative that competing terminals are taking away market share has: not played out so far as utilization at competitor terminals continues to languish at 14-43%, and overlooked Petronet LNG’s strong scale, historical capex, and connectivity advantages. While concerns around a potential tariff cut in FY28 linger, we highlight that a sharp cut in tariff at Dahej in FY28 can lead to industry-wide pressure, as competing terminals were built at ~2x the capital cost (Dahej capex/mmtpa = ~Rs 5 billion vs ~Rs 9- 11 billion for competitors). This would further increase the relative attractiveness of the Dahej terminal, especially as its expanded capacity comes online. .At 9.7x FY27 P/E and 4% dividend yield, we believe valuations are at absolute rock bottom levels. We move to a DCF-based target price (earlier 10x FY27 PE) and assume a 10% tariff cut in Dahej and Kochi in FY28, 4% escalation thereafter, 2% terminal growth, and 11.2% WACC, leading to a target price of Rs 410/share. While we build in full capex for the petchem venture, we value it at only 0.5x equity..Click on the attachment to read the full report:.'Add' Inventurus Knowledge Shares Maintains ICICI Securities — Here's Why.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Petronet LNG Upgraded To 'Buy' By Motilal Oswal — Here's Why

Motilal Oswal upgrades Petronet LNG to Buy with a DCF-based target price of Rs 410/share.

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Petronet LNG Upgraded To 'Buy' By Motilal Oswal — Here's Why

Motilal Oswal upgrades Petronet LNG to Buy with a DCF-based target price of Rs 410/share.

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