The LNG industry is poised for significant growth, with global supply capacity expected to reach 666.5 MTPA by 2028 which is driven by new projects primarily in the U.S. and Qatar. However, the demand growth depends due to declining imports in key markets like Europe and Asia and can lead to potential oversupply and lower prices as per International Energy Agency World Energy Outlook 2024.
With a market capitalization of Rs 50,572 crore, on Monday, the shares of Petronet LNG Ltd touched a day’s high of Rs. 340.85 which is 2.95 percent higher than the previous closing price of Rs. 333.10 apiece. The stock reiterated to Rs. 337.40 from the day’s high. This stock has delivered around 64 percent return in the past year and thus outperformed the nifty index in the same period.
Brokrage Recommendation:-
UBS, one of the globally reputed brokerages firm, gave a ‘Buy’ call on the stock with a target price of Rs 400 apiece upgrade from Rs. 320 per share, indicating a potential upside of 20 percent from Monday’s closing price of Rs 333.10 per share.
Brokerage rational:-
UBS expects that around 80-85 percent of India’s incremental gas demand over the next three years will be met through imports. The Liquefied natural gas imports to India are projected to increase by about 11 million metric tons per annum (MMTPA) from fiscal 2024 to fiscal 2028.
As per UBS, Petronet LNG is likely to handle half of this increase. Their forecast is based on the expansion of Petronet’s Dahej terminal, which will grow from 17.5 MMTPA to 22.5 MMTPA by March 2025 to store more LNG. This expansion positions Petronet to play a role in meeting the rising demand for natural gas in India, driven by the country’s growing energy needs. The revenues are projected to touch around Rs. 78,800 crore by FY29 supported by higher LNG volumes and expect EBIT margins to be robust even with capex spread across the next four years.
Financial performance:-
The company’s revenue surged 3.9 percent, increasing from Rs 12,533 crore in Q2FY24 to Rs 13,024 crore in Q2FY25. However, net profit increased by 1.75 percent from Rs 856 crore to Rs 871 crore in the same period.
Revenue segmentation:-
In Q2FY25, Petronet LNG’s considers their revenue from the operation in the business of importing and processing of liquefied natural gas.
Company profile:-
Petronet LNG Limited was established in 1998. It is a leading player in India’s energy sector, specializing in the import, storage, and regasification of liquefied natural gas (LNG). They operate in two major terminals namely Dahej in Gujarat with a capacity of 17.5 MMTPA and Kochi in Kerala with 5 MMTPA.
Their business model focuses on securing long-term LNG supply contracts, ensuring energy security for India, and catering to domestic gas demand. By leveraging partnerships with major oil and gas companies, Petronet accounts for approximately 34% of India’s gas supplies and plays a crucial role in the country’s transition to cleaner energy sources.
Written by Santhosh S
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