PSU gas stock hits 6% upper circuit on strong earnings, beats estimates in Q1FY25; Buy or sell?

Petronet LNG Share Price Today: Shares of Petronet LNG rallied over six per cent to hit a lifetime record-high mark during intra-day on Thursday, July 25, a day after beating D-Street estimates in the April-June quarter of fiscal 2024-25 (Q1FY25). India's largest state-owned importer of liquid gas has given nearly 64.35 per cent returns to traders on equity investments in the last one year.

In the June quarter, Petronet LNG reported a rise of 40 per cent in net profit at ₹1,100 crore, compared to ₹787.33 crore in the corresponding period last year. The LNG major reported a total income of ₹13,592.84 crore for the quarter under review, with a 15.2 per cent increase on a year-on-year (YoY) basis.

Also Read: Petronet LNG reports 40% rise in Q1FY25 net profit at ₹1,100 cr vs ₹787 cr in Apr-Jun FY24

Petronet LNG Q1 Results - Key Metrics

The gas major's revenue from operations rose 15 per cent to ₹13,415.13 crore in the June quarter. Petronet LNG managing director & CEO Akshay Kumar Singh said the company processed the highest-ever quarterly volume of 262 trillion British thermal unit (TBTU) in April-June, 14 per cent higher than the year-ago period and 12 per cent more than 234 TBTUs in the preceding quarter.

“During the current quarter ended June 30, 2024, Dahej terminal processed the highest-ever 248 TBTU of LNG as against 219 TBTU during the January-March period and 217 TBTU during the corresponding quarter ended 30 June, 2023, witnessing A growth of 13 per cent and 14 per cent, respectively,” said Petronet LNG in a statement.

Also Read: Petronet secures Qatari gas supplies till 2048

The mainstay Dahej import facility in Gujarat saw capacity utilisation soar to 109 per cent in the quarter, as against 97 per cent in the preceding quarter and 96 per cent in the year-ago period. The Dahej facility recorded the highest-ever single-day send-out of 3.15 TBTU, equivalent to one full shipload of 1,38,000 cubic meters capacity.

The company achieved higher throughput and robust financial results owing to stable LNG prices, better capacity utilisation of its terminals and efficiency in its operations and import LNG averaged $11.5-12 per million British thermal unit.

Petronet is on track to raise the capacity of the Dahej terminal from 17.5 million tonnes a year to 22.5 million tonnes next year. “The company was able to achieve higher throughput and robust financial results owing to stable LNG prices, better capacity utilization of its terminals and efficiency in its operations,” said the gas major.

The Dahej terminal witnessed a capacity utilization of 109 per cent in the April-June quarter, as against 97 per cent in the previous quarter (January-March) and 96 per cent in the corresponding quarter of the last fiscal. The overall LNG volume processed by the company in Q1 was 262 TBTU, 14 per cent higher on year.

Also Read: Lingering risks could play spoilsport for Petronet LNG

Petronet LNG Share Price Trend

On Thursday, shares of Petronet LNG opened at ₹344.60 and gained 6.35 per cent to hit a fresh 52-week high mark of ₹368, before settling 3.93 per cent higher at ₹365.25 apiece on the BSE. According to the stock exchange, the LNG major commands a market capitalisation (cap) of ₹54,787.50 crore.

According to Trendlyne data, Petronet LNG has given better returns compared to Nifty 50 and Sensex in the last one year, but worse than the industry. In the past six months, the PSU stock gave 41.34 per cent returns against 13.76 per cent and 12.74 per cent returns by Nifty 50 and Sensex, respectively. In the last year, Petronet LNG gave 64.35 per cent returns, compared to 24.07 per cent and 20.68 per cent by Nifty 50 and Sensex, respectively.

Brokerage maintain ‘sell’ on stock

Domestic brokerage firm Prabhudas Lilladher has maintained a ‘sell’ rating on the PSU gas stock. ‘’The management expects the terminal to continue operating above 100 pr cent utilization in Q2 as well. However, we remain negative on the stock given the expensive valuations,'' said the brokerage.

‘’The company is also likely to be impacted by competition from upcoming LNG terminals, rising domestic gas supply and underutilization of its Kochi terminal. Additionally, capex on its petrochemical project is likely to be margin dilutive (Link). We maintain ‘Sell’ rating with a TP of Rs266 based on 10x FY26 EPS,'' it added.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.