Buy Petronet LNG Ltd - Motilal Oswal

Petronet LNG (PLNG IN; Mkt Cap USD2.1b, CMP Rs130, Buy)

Petronet LNG reported 3QFY11 PAT of Rs1.7b against our estimate of Rs1.3b (up 105% YoY and up 30% QoQ). EBITDA was Rs3.5b (up 66% YoY).

Petronet earned marketing margins of ~Rs26/mmbtu in 3QFY11 on its spot cargo over and above re-gasification charges.

Petronet LNG signed a 1.1mmtpa LNG contract for FY12 and FY13 and back-to-back contracts with Indian customers.

Motilal Oswal has increased its FY11 EPS by 15% to Rs8 to factor-in strong 3QFY11 reported numbers and higher volume assumptions in 4QFY11. The stock trades at 11.5x FY13E EPS of Rs11.4. We value Petronet LNG at Rs150/share, the average of the results of two valuation methodologies (1) P/E (13x FY13E EPS, Rs160/share) and (2) DCF (Rs140/share). Maintain Buy.

Source : Equity Bulls

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