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Buy Petronet LNG, target price Rs 340: Motilal Oswal


Motilal Oswal has given a purchase ranking to Petronet LNG Ltd with a target price of Rs 340. The share price moved down by -1.78 per cent from its earlier shut of Rs 258.05. The inventory’s final traded price is Rs 253.45.

Petronet LNG’s 4QFY20 EBITDA stood at Rs 7 billion in opposition to the brokerage estimate of Rs 11.2 billion; +11 per cent 12 months on 12 months and -37 per cent quarter on quarterQoQ, led by larger different expenditure. Different expenditure was larger by Rs 2.eight billion in 4QFY20, primarily because of Rs 1.78 billion on account of forex associated adjustments on lease legal responsibility and higher-than-normal expenditure on CSR. Additionally, decrease different revenue led to PAT coming in 18 per cent decrease 12 months on 12 months at Rs 3.6 billion in opposition to brokerage estimate of -51 per cent; -47 per cent quarter on quarter. Tax fee was 26.2 per cent in 4QFY20.

Funding Rationale

Petronet plans to arrange 50 small scale LNG stations on 5 highways over the following 2-Three years (underneath Part-I). It has entered right into a MoU with Gujarat Gasoline to arrange 5 stations on the Delhi-Mumbai freeway; IGL will put up Three stations (whole eight stations on that freeway). One other MoU has been signed with IOC for establishing 5 LNG stations in southern India. The corporate would target 300 stations in Part-II by 2025 and ~1,000 stations pan India in Part-III.

Petronet LNG is making an attempt to arrange stations by tying up with CGDs and OMCs (land by corporations and allotting unit by Petronet).

The present low spot price atmosphere bodes properly for the federal government’s plan to result in main reforms within the gasoline sector, together with the revival of gas-based energy vegetation. The three issues of (a) competitors, (b) utilization of money, and (c) long-term development – are properly answered by administration. Additionally, the Nationwide Inexperienced Tribunal’s actions in opposition to severely/critically polluted industrial clusters might present an enormous enhance to gasoline consumption within the nation.

The corporate has declared ultimate dividend of Rs 7/share in FY20. The brokerage expects the dividend payout to stay robust, presenting a gorgeous dividend yield of 3- 3.5 per cent over FY21-22E. The inventory trades at occasions FY22E EPS of Rs 21.5 and 6.6 occasions FY21E EV/EBITDA, with anticipated EBITDA CAGR of ~13 per cent over FY20-22E. The brokerage values Petronet LNG on discounted money circulate foundation to reach at a good worth of Rs 340 (an upside of 32 per cent).


Supply: Motilal Oswal


For the quarter ended March 31, 2020, the corporate reported consolidated gross sales of Rs 8567.15 crore, down -3.85 per cent from final quarter gross sales of Rs 8910.23 crore and up 2.19 per cent from final 12 months similar quarter gross sales of Rs 8383.20 crore. The corporate reported web revenue after tax of Rs 359.02 crore within the newest quarter.

Promoter/FII Holdings

Promoters held 50 per cent stake within the firm as of March 31, 2020, whereas FIIs held 29.31 per cent, DIIs 7.77 per cent and public and others 12.89 per cent.

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