'Reduce' Petronet LNG Shares Maintains HDFC Securities, Trims Target Price — Here's Why

Given muted volume growth and subdued return ratios resulting from high capex cycle over the next three-four years, Petonet LNG’s profitability growth, free cash flow generation and return ratios should remain under pressure during FY26E-FY28E..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..HDFC Securities Institutional Equities.At the current market price, Petronet LNG Ltd. is trading at 11x Sep 26 EPS, which is a premium of ~4% to its five-year average 1 year forward PE of 10.7x. Given the high capex cycle and growth challenges for the next three-four years, this premium valuation is unwarranted, in our view. Hence, we reiterate our Reduce call on Petornet LNG with a target price of Rs 280/share..India’s total gas consumption during the first four months of FY26 (Apr 25- Jul 25) has declined by 6.8% YoY and gas imports have declined by 9.7% YoY. Higher reduction in gas imports compared to the decline in total gas consumption was owing to higher LNG prices compared to alternative fuels. LNG price fell in August 25 (-7.4% MoM) and September 25 (-2.4% MoM till Sep 19, 2025) but is still at 18.7% premium to fuel oil prices. We expect total gas consumption and gas import volume should see an uptick in Q2 FY26 as refineries come back online after undertaking planned shutdowns in previous quarter and moderation in LNG prices. However, we believe PLNG will not observe any significant improvement in its market share. Its Kochi terminal shall continue to remain handicapped due to inadequate connectivity. Given muted volume growth and subdued return ratios resulting from high capex cycle over the next three-four years, Petonet LNG’s profitability growth, free cash flow generation and return ratios should remain under pressure during FY26E-FY28E. We expect EPS to grow at a CAGR of 2.7% during FY25-FY28E as against 7.4% recorded during FY21-FY25. Aggregate FCF of Rs -38.14 billion to be generated during FY26- FY28E vs Rs 146 billion generated during FY21-FY25E and RoE to decline from average of 23.9% recorded during FY21-FY25 to an average of 17.2% during FY26-FY28E. .Click on the attachment to read the full report:.'Buy' L&T Shares Maintains Motilal Oswal, Says Execution Momentum To Remain Strong.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.

'Reduce' Petronet LNG Shares Maintains HDFC Securities, Trims Target Price — Here's Why

Given the high capex cycle and growth challenges for the next three-four years, Petronet LNG's premium valuation is unwarranted, says the brokerage.

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