Motilal Oswal - Petronet Lng Limited (PETRONET) MOSL: PETRONET LNG (Buy)-Favorable spot prices may help, amid Dahej expansion

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Motilal Oswal

Swarnendu Bhushan

EUR 120.00 For Business Accounts Only

MOSL: PETRONET LNG (Buy)-Favorable spot prices may help, amid Dahej expansion

Petronet LNG: Favorable spot prices may help, amid Dahej expansion

(PLNG IN, Mkt Cap USD5.1b, CMP INR238, TP INR315, 33% Upside, Buy)

Dahej is expanding from 15mmtpa to 17.5mmtpa capacity in few weeks. On the expanded capacity, utilization contracts are only for 15.75mmtpa.
Spot LNG prices have declined to ~7% of Brent for future deliveries. Favorable low prices should enable PLNG to garner handsome marketing margins. Competition too remains weak. Reiterate Buy with target price of INR315.

Low spot LNG prices

Amid capacity addition of 30mmt in 2019 against expected slowing demand, spot LNG prices have remained weak, trading at ~7% slope to Brent.
In the recent past, PLNG had ‘take-or-pay’ utilization contracts for 15.75mmtpa on nameplate capacity of 15mmtpa, leaving hardly any scope for spot volumes.
The upcoming expansion from 15mmtpa to 17.5mmtpa is likely to help PLNG gain handsomely in spot contracts.

08/05/2019 1 EN

Underlying

Petronet Lng Limited

Petronet LNG develops, designs, constructs, owns and operates Liquefied Natural Gas (LNG) import and regasification terminals in India. Co. operates through the natural gas business segment. Co.'s terminals include Dahej LNG terminal, Kochi LNG terminal and Solid cargo port. Co. owns and operates a LNG regasification terminal with name plate capacity of 10 MMTPA at Dahej, in the State of Gujarat. Co. also has commissioned another LNG terminal with name plate capacity of 5 MMTPA at Kochi, in the State of Kerala. Solid Cargo Port Terminal has facilities to import/export bulk products, such as coal, steel and fertilizer.

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INE347G01014 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Swarnendu Bhushan

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MOSL: PETRONET LNG (Buy)-Favorable spot prices may help, amid Dahej expansion

MOSL : PETRONET LNG: Volumes dip, but outlook remains intact

For PETRONET L N G, the environment deterioration entails a downgrade to Neutral

MOSL: PETRONET LNG (Buy)-Volumes in-line; Dahej to recover

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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