Buy Petronet LNG; target of Rs 370: Emkay Global Financial

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Volume growth: PLNG's Dahej terminal capacity utilization was 73% in 2QFY27, with overall utilization at 64%. The company expects steady Indian gas demand, driven by fertilizers and CGD, with potential for demand rebound in other sectors.
  • Cost discipline: Lower opex and efficient operations contributed to strong results. The company targets Rs90bn capex in FY27/28, tapering from FY29.
  • LNG pricing: Normalization of the Middle East situation and easing of gas prices could lead to a rebound in demand from other sectors.
  • Regasification capacity expansion: Discussions are ongoing to tie up the new 5mmtpa Dahej capacity, with existing and new offtakers.

Thesis Validation Checklist

To validate the analyst's thesis, watch for:

  • Steady Indian gas demand, particularly from fertilizers and CGD.
  • Rebound in demand from sectors like refinery-petchem and industrials as LNG prices ease.
  • Progress on the Kochi-Bengaluru pipeline, expected to be completed by FY27-end.
  • The company's ability to maintain cost discipline and efficient operations.
  • Any updates on the Qatar contract renewal and potential impact on PLNG's operations.