Strong capacity growth and reasonable valuations had driven the recent upgrade on Petronet LNG by Motilal Oswal.
India’s LNG now accounts for nearly 50% of the total gas consumption, compared to 35% a decade earlier. However, Petronet LNG saw an addition of only 7.5 MTPA capacity during this period due to limited regasification capacity, which led to its LNG import market share declining to 69% from 78% in financial year 15.
However, Petronet LNG is strategically positioned to capture the next leg of India’s LNG import growth, led by the upcoming 5 MMTPA capacity at Dahej, which is likely to be commissioned by December 2025.”Despite new capacity additions like HPCL’s Chhara terminal and expansions such as Dabhol’s 5 MMTPA project, we believe Petronet LNG is well positioned to strengthen its market share,” Motilal Oswal wrote in its note.
According to PNGRB, India’s LNG imports are likely to more than double by calendar year 2030, driven by robust demand growth and only moderate gains in domestic gas production. The brokerage believes that over the next 12-18 months, Petronet LNG is likely to secure more long-term contracts, which can improve visibility on volume ramp-up and earnings sustainability, which will serve as a significant catalyst for the stock.
Motilal Oswal’s base case for Petronet LNG, assumes a 10% tariff cut in financial year 2028, followed by a 4% increase for both the terminals. At 8.9 times financial year 2027 price-to-earnings and a 4.3% dividend yield, Motilal Oswal believes that Petronet LNG’s valuations are at rock bottom.
Out of the 34 analysts that have coverage on Petronet LNG, 13 of them have a “buy” rating, 11 say “hold”, while 10 have a “sell” rating on the stock.
Shares of Petronet LNG ended 1.7% lower on Tuesday at ₹268.85. The stock is down 11% in the last one month, and 23% in 2025 so far.
