On Friday, an analyst from Jefferies reiterated an Underperform rating on Petronet LNG Ltd. (PLNG:IN) stock, with a steady price target of INR240.00. The analyst pointed out that the company's EBITDA fell short by 16%, even after accounting for one-off gains, with Dahej volumes being 2% lower than Jefferies' expectations as LNG demand moderated after the summer season. Management has guided to a 95-100% utilization rate at Dahej in the second half of FY25.
Despite the current lack of offtakers for the 5 million metric ton expansion set for completion by March 2025, management anticipates full utilization in FY26. However, the Jefferies analyst expressed concerns over the economic viability of the planned PDD+East coast terminal projects. The firm projects a 5% compound annual growth rate (CAGR) in profit after tax (PAT) from FY24 to FY27E, but considers the risk-reward balance unfavorable at the stock's current valuation, thus maintaining the Underperform rating with an INR240.00 price target.
InvestingPro Insights
To complement the Jefferies analyst's perspective on Petronet LNG Ltd. (PLNG:IN), InvestingPro data offers additional insights into the company's financial health and market performance. Despite the analyst's concerns, Petronet LNG shows some positive indicators that investors might find intriguing.
According to InvestingPro data, Petronet LNG has a market capitalization of $6.05 billion and is trading at a P/E ratio of 12.94, which is relatively low considering its growth prospects. This valuation metric aligns with one of the InvestingPro Tips, which notes that the company is "Trading at a low P/E ratio relative to near-term earnings growth."
Moreover, Petronet LNG has demonstrated strong profitability, with a gross profit of $962.06 million in the last twelve months as of Q1 2025. The company's EBITDA grew by 12.18% during the same period, reaching $679.85 million. This performance supports another InvestingPro Tip, which states that the company has been "Profitable over the last twelve months."
Investors may also be interested to know that Petronet LNG has maintained dividend payments for 18 consecutive years, as highlighted by an InvestingPro Tip. This track record of consistent dividends could be particularly appealing to income-focused investors, especially given the company's strong cash position relative to its debt.
While the Jefferies analyst expresses concerns about future projects, it's worth noting that Petronet LNG has achieved a remarkable 54.63% price total return over the past year. This performance underscores the InvestingPro Tip indicating a "High return over the last year."
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Petronet LNG's investment potential.
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