Citigroup puts a buy on Petronet LNG

Citigroup has reiterated a ‘Buy’ rating on Petronet LNG and set a target price of Rs 180 as it remains positive on the long-term LNG outlook in India, given the lack of alternatives in the domestic supply front and a gradual increase in gas usage through substitution of other energy sources.

For Petronet LNG, expectations have moderated since the start of the year, with the market now pricing in no EPS growth for the next two years. FY12-15E EBITDA CAGR, however, stays robust at ~15%, despite delay in the Kochi-Bangalore/Mangalore pipeline.

The company has reported a PAT of Rs 271crore, which was ahead of estimates despite the lowest volumes in five quarters.

The surprise was driven by a combination of strengthening in marketing margins, higher efficiency gains, and one-off cost savings due to dry docking of one of the chartered LNG carriers during the quarter.