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

Emkay Global Financial' research report on Petronet LNG PLNG reported 2QFY27 SA EBITDA/APAT of Rs18.0/13.4bn, up 10%/11% qoq and 5%/6% above our estimates, driven by better-than-expected volumes and lower opex, while implied spot margins at $7.6/mmbtu missed estimates by 9%. Dahej utilization improved to 75% from 67% qoq, supported by higher supplies from QatarEnergy (QE) and 7% rise in tolling volumes. Indian gas demand has been steady in FY27YTD, largely supported by fertilizers and CGD, with the momentum expected to sustain. Normalization of the ME situation and consequent easing of gas prices is expected to revive demand from other sectors.

Kochi utilization was lower at ~23%, but volumes are expected to improve following completion of the Kochi-Bengaluru pipeline, targeted for FY27-end. PLNG waived off UoP dues of Rs2.5bn in 2Q, with net impairment loss of Rs1.3bn. Capex is targeted at Rs90bn in FY27/28, tapering from FY29. Outlook We raise FY27E earnings by 20%, factoring in the higher unit margins and volumes; we raise FY28/29E earnings by 2% each. We retain BUY, while raising Sep-27E TP by ~3% to Rs370 from Rs360. For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management.