JPMorgan Lifts Petronet LNG Target, Sees 18% Stock Upside

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AuthorVihaan Mehta|Published at:
JPMorgan Lifts Petronet LNG Target, Sees 18% Stock Upside
Overview

JPMorgan upgrades Petronet LNG to 'Overweight' with a ₹335 target, implying an 18% stock rise. Key drivers include Dahej expansion, tariff hikes, and reduced impairment costs. Despite regulatory concerns highlighted by Citi, JPMorgan sees near-term earnings support.

Petronet LNG shares climbed significantly Friday following a bullish call from JPMorgan, which upgraded the stock and sharply increased its price target.

H3JPMorgan's Revised Outlook

The brokerage firm elevated Petronet LNG to 'Overweight', setting a new price objective at ₹335 per share. This adjustment signals an anticipated 18% rise from recent trading levels, driven by what JPMorgan views as strengthening earnings momentum.

H3Key Growth Catalysts

Analysts pinpoint the commissioning of the 5 million tonnes per annum Dahej expansion, expected in March, as a primary volume driver. Additionally, a 5% tariff escalation and a reduction in impairment costs are seen as supportive financial factors, potentially leading to upward revisions in consensus earnings forecasts.

H3Regulatory Considerations

While JPMorgan acknowledged potential headwinds, including the renegotiation of Dahej tariffs and substantial capital expenditure for PDH projects, it suggests these issues are unlikely to be resolved quickly. Separately, Citi flagged regulatory risks from the Petroleum and Natural Gas Regulatory Board's (PNGRB) recent discussion paper, which scrutinizes the gas value chain and recommends formal regulation for regasification tariffs.

H3Market Sentiment

Despite these regulatory concerns, JPMorgan believes improving earnings performance in the interim will provide a solid foundation for the stock. The analyst consensus shows 33 firms tracking Petronet LNG, with 15 recommending 'Buy', nine 'Hold', and nine 'Sell'.

H3Stock Performance

Shares of Petronet LNG were up 3.09% at ₹291.90 on Friday.

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