Nomura has maintained its Buy rating on Petronet LNG, while trimming its earnings estimates for FY25 and FY26 by 7% and 2%, respectively. The brokerage has set a target price of Rs 385 per share, implying a potential upside of 13.4% from the current market price of Rs 339.55.
Q2 performance below estimates
Petronet LNG’s Q2 results came in below expectations, primarily due to a lower contribution from spot LNG. This impacted the company’s profitability, leading to a downward revision in Nomura’s earnings per share (EPS) estimates for the next two fiscal years.
Dahej expansion and Qatar negotiations
Despite the weak quarterly performance, Petronet LNG’s Dahej terminal expansion remains on track. The company is working on expanding its capacity, which could drive future growth. Moreover, management is optimistic about concluding negotiations with Qatar for long-term LNG supply within the next six months, which could further strengthen its position in the market.
EPS cuts and future outlook
Nomura has reduced its EPS estimates for FY25 and FY26 by 7% and 2%, reflecting the weaker-than-expected Q2 performance. However, the brokerage remains positive on the stock, citing the Dahej expansion and the potential for successful negotiations with Qatar as key growth drivers.
At the current price levels, Petronet LNG offers an attractive risk-to-reward ratio, with Nomura’s target price of Rs 385 suggesting a 13.4% upside from the CMP of Rs 339.55.
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