ICICI Securities has revised its rating on Petronet LNG to ‘Add’ from ‘Sell’ and raised its price target to ₹330, implying a potential upside of around 10% from Thursday’s closing price.
The brokerage recently met with the management of Petronet LNG and believes that the company’s prospects are set to gradually improve over FY26-28E.
Factors supporting this view include moderate LNG prices, a planned 5 million tonne expansion at the Dahej terminal by H1FY26, and the expected completion of the Kochi-Bengaluru pipeline by CY25. While cash flow hits from the Gopalpur terminal and the petrochemical project may be back-ended, the outlook remains constructive.
ICICI Securities flagged lingering concerns around return ratios from the Petchem project and limited visibility on the Gopalpur terminal. However, it noted optimism around domestic gas demand and a potential recovery in Petchem margins by FY28-29E, when both projects are expected to become operational.
At current levels, the stock trades at 9.1x FY28E EPS and 1.7x price-to-book, which ICICI Securities said is reasonable. Based on its revised estimates, the brokerage sees an 11% upside, especially after the stock’s 13% decline over the past six months.
Key upside triggers include stronger utilisation, a sharp fall in LNG prices, and a favourable extension of the RasGas contract. On the flip side, downside risks involve greater disruption in Russian gas supplies and delays in project execution.
As of the latest update, Petronet LNG shares are trading 1.58% higher on Friday at ₹304.65. The stock has declined over 12% year-to-date.
