PETRONET LNG LTDLong
Strong Buy Petronet cmp 214, target 300, Timeframe 1 month.
Updated
Petronet is into developing, designing, construction, operation of owned and import Liquified Natural Gas(LNG) terminals in India.
The company is in the niche business of transportation, storage and regasification of LNG. It owns and operates 2 regasification terminals at Dahej (Gujarat) and Kochi (Kerala) with a combined capacity of 22.5 MMTPA. It accounts for 40% of gas supplies in the country and handles ~75% of LNG imports in India. The company's major customers are GAIL, IOCL and BPCL.
Petronet LNG has pioneered the concept of consumption of LNG as liquid ONLY in long distance heavy duty trucks and inter city buses. Small Scale LNG (SSLNG) includes supply of natural gas in the form of LNG to small consumers through unconventional transportation methods like trucks, small vessels etc
Petronet is taking initiatives for promoting environment friendly LNG as a fuel in road transportation. It has commissioned India's first LNG dispenser stations inside Dahej & Kochi LNG terminals and has also commissioned the first commercially approved LNG powered buses of the Country.It has signed MOU's with IOCL, Indraprastha Gas Limited, Sabarmati Gas Limited, State Roadways Corporation like KSRTC for running few buses on LNG and establishing LNG dispensing stations at their locations.
Petronet LNG is planning for construction of LNG regasification terminal at Bangladesh. It has submitted detailed feasibility report for construction of storage and gasification terminal in South Andaman. Similarly it is planning for setting up a Floating storage & regasification terminal at Colombo, Sri Lanka along with Japanese consortium.
Petronet is planning for expansion of the capacities at Dahej Terminal to 22.5 MMTPA from the current 17.5 MMTPA.
Key Ratios:
ROCE - 26.6 %
ROE - 22.8 %
EPS - ₹ 22.7
Dividend Yield - 3.27 %
Debt to equity - 0.20
Price to book value - 2.00
Stock P/E - 9.44
Industry PE - 18.1
Conclusion:
With such a high ROCE and good dividend yield, Petronet is just trading at PE of 9.44 which is considerably undervalued as compared to Industry PE of 18. Technically the stock is poised to give a sharp movement upside as it started rising from strong support zone which is a double bottom pattern and the trend bullish structure is intact. Earlier the breakout of trendline is acting as as support. Trendline connecting lows was taken out for a few days only to grab a liquidity and exit weak hand and to retest strong support levels and from there it has risen sharply with high volumes and it iss again above lower trendline indicating a sharp reversal and good momentum to follow in coming days. The target expected is 300 in timeframe of 1 month which comes to 40% return in just 1 month.
The company is in the niche business of transportation, storage and regasification of LNG. It owns and operates 2 regasification terminals at Dahej (Gujarat) and Kochi (Kerala) with a combined capacity of 22.5 MMTPA. It accounts for 40% of gas supplies in the country and handles ~75% of LNG imports in India. The company's major customers are GAIL, IOCL and BPCL.
Petronet LNG has pioneered the concept of consumption of LNG as liquid ONLY in long distance heavy duty trucks and inter city buses. Small Scale LNG (SSLNG) includes supply of natural gas in the form of LNG to small consumers through unconventional transportation methods like trucks, small vessels etc
Petronet is taking initiatives for promoting environment friendly LNG as a fuel in road transportation. It has commissioned India's first LNG dispenser stations inside Dahej & Kochi LNG terminals and has also commissioned the first commercially approved LNG powered buses of the Country.It has signed MOU's with IOCL, Indraprastha Gas Limited, Sabarmati Gas Limited, State Roadways Corporation like KSRTC for running few buses on LNG and establishing LNG dispensing stations at their locations.
Petronet LNG is planning for construction of LNG regasification terminal at Bangladesh. It has submitted detailed feasibility report for construction of storage and gasification terminal in South Andaman. Similarly it is planning for setting up a Floating storage & regasification terminal at Colombo, Sri Lanka along with Japanese consortium.
Petronet is planning for expansion of the capacities at Dahej Terminal to 22.5 MMTPA from the current 17.5 MMTPA.
Key Ratios:
ROCE - 26.6 %
ROE - 22.8 %
EPS - ₹ 22.7
Dividend Yield - 3.27 %
Debt to equity - 0.20
Price to book value - 2.00
Stock P/E - 9.44
Industry PE - 18.1
Conclusion:
With such a high ROCE and good dividend yield, Petronet is just trading at PE of 9.44 which is considerably undervalued as compared to Industry PE of 18. Technically the stock is poised to give a sharp movement upside as it started rising from strong support zone which is a double bottom pattern and the trend bullish structure is intact. Earlier the breakout of trendline is acting as as support. Trendline connecting lows was taken out for a few days only to grab a liquidity and exit weak hand and to retest strong support levels and from there it has risen sharply with high volumes and it iss again above lower trendline indicating a sharp reversal and good momentum to follow in coming days. The target expected is 300 in timeframe of 1 month which comes to 40% return in just 1 month.
Trade closed manually
Petronet has made a high of 284.55 on 30th Jan, 2024. Since the period of holding exceeded the mentioned timeframe, suggesting to book profit at current levels of 262 or keep a trail stop of 253 and exit near recent highs.Trade closed: target reached
When we gave buy call, no one recommended, no TV analyst gave buy. Now it has gone up significantly, now TV analyst recommending that above 300 a breakout is there and it can go up for 370-380 quickly. Buy in range of 270-280 is recommended for a higher target with a short time frame.
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