Whalesbook
Mixed Volumes Offset by Stronger Margin
Prabhudas Lilladher's upgrade follows mixed volume performance. The company saw 6.8% year-over-year growth from third-party volumes, but this was outweighed by a 24.6% drop in long-term contracted volumes and a 6.0% sequential decrease. Despite stable EBITDA (INR13.7 billion, up 6.8% YoY) thanks to higher margins and trading gains, PAT fell 16.3% quarter-on-quarter to INR8.4 billion. However, PAT was flat year-over-year.
Capacity Expansion Continues Amid FY26 Forecast
For fiscal year 2026, EBITDA and PAT are forecast to decrease by 9.0% and 10.0% year-over-year, respectively, reaching INR53.0 billion and INR38.0 billion. Petronet LNG has commissioned a 5 million metric tons per annum (mmtpa) expansion at Dahej, bringing its total capacity to 22.5 mmtpa. Capital expenditure remains on schedule, with INR90 billion planned for FY27, including INR75 billion for the petchem project. Investors will watch supply diversification and LNG storage capacity growth.
Future Volumes Expected to Recover
New contracts with ExxonMobil (starting April 2026) and Equinor (starting May 2026) will boost future volumes. Analysts expect 16.1 mmtpa in FY27, down from 17.6 mmtpa in FY26, due to lower Dahej utilization early in FY27. However, volumes are projected to rebound to 18.6 mmtpa in FY28 as operations normalize.
Target Price Increased to ₹310
Prabhudas Lilladher reaffirmed its 'Accumulate' rating for Petronet LNG. The target price was raised to ₹310, up from ₹269. This new target is based on a 10x multiple of FY28 Earnings Per Share, an increase from the previous 9x multiple.