Motilal Oswal has maintained its ‘Buy’ rating on Petronet LNG with a target price of Rs 410, implying an upside potential of more than 50%. The brokerage said its bullish view on the stock is driven by an inexpensive valuation and strong upcoming capacity growth.
Motilal Oswal on Petronet LNG: Tide is turning, slowly
Petronet LNG’s market share in India’s LNG imports, which fell to 69% in FY25 from 78% in FY15, is expected to improve once the new Dahej capacity becomes operational.
Motilal Oswal on Petronet LNG: Increase in natural gas consumption to benefit
The brokerage house assumed a modest 4.5% CAGR in India’s natural gas consumption over FY25-30 and a 2% CAGR in domestic natural gas production. “India’s LNG imports need to grow at a robust 6% CAGR (32 mmscmd increase in LNG imports over FY25-30), and this should benefit Petronet LNG’s new expanded capacity,” said Motilal Oswal. The brokerage’s current assumptions imply that Petronet LNG secures only a 41% share of incremental import growth (69% of total imports in FY25).
Motilal Oswal on Petronet LNG: Timely expansion for strong leadership in LNG regasification
Infra moat and cost advantage to help Petronet LNG sustain its dominance, said Motilal Oswal. With the upcoming 5 mmtpa Dahej expansion, which is likely to be commissioned by December 2025, the company is strategically positioned to capture the next leg of India’s LNG import growth.
“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,” said the brokerage house.
Motilal Oswal on Petronet LNG: India’s LNG imports to more than double
According to the Petroleum and Natural Gas Regulatory Board, India’s LNG imports are expected to more than double by CY30, supported by strong demand growth and only modest increases in domestic gas production. The International Energy Agency also projects only a 0.6% CAGR in domestic natural gas production, leading to a 10.5% CAGR in LNG demand, reaching 178 mmscmd.
However, while brownfield expansion from existing terminals is a risk, the brokerage expects this is unlikely to play out given the lacklustre utilisation at existing facilities.