The broking agency believes the inventory can rally from the present market worth of Rs 223 to Rs 310, thus giving traders a superlative earnings of round 40%.
Positive on the fuel story
Motilal Oswal says that it continues to stay optimistic on the fuel story in India because the market share of fuel within the major power combine is simply 6%.
“It is expected to almost double by CY30 (growing at a compounded annual growth rate of 6-8%, as per our gas demand-supply model), primarily on account of the development of new CGDs and an increase in consumption at fertilizer and refining/petchem plants,” the brokerage has stated.
Apart from the dedicated capex plan of Rs 41 billion for the Dahej enlargement over the following three years, Petronet LNG had introduced Rs 120 billion in investments in LNG retailing and compressed biogas within the final quarter of FY21. The commentary has raised issues on capital allocation and potential returns from the brand new investments, thereby retaining the inventory underneath stress.
“Of the capital expenditure plans announced by the company (such as setting up 1,000 LNG stations: Rs 80 billion, a biogas plant: Rs 40 billion, an additional tank in Kochi: Rs 7 billion, and an LNG terminal on the east coast: Rs 16 billion), we believe both LNG retailing and biogas are more futuristic in nature and may not see any significant capex over the next 2-3 years,” Motilal Oswal has stated in its report.
“The stock trades at 9.2 times FY23E EPS and 5.3 times FY23E EV/EBITDA. We value Petronet LNG on a DCF basis to arrive at a fair value of Rs 310 and maintain Buy on the stock,” the brokerage has stated.
We want to inform our readers to watch out when investing in shares provided that the Sensex has now rallied previous the 56,000 factors mark.
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