Fears of balance sheet stress leave Petronet LNG investors jittery

Petronet LNG Ltd’s shares fell 5% Monday on the National Stock Exchange after it said it has signed a non-binding memorandum of understanding (MOU) with Tellurian Inc. Sure, the management’s assurance during an investor call that Petronet’s equity investment in Tellurian would be limited up to $1 billion has helped sentiments a bit. Further, Petronet has said that it will enter into back-to-back contracts with off-takers to avoid any volume or pricing risk, which brings comfort.

But Petronet’s shares are still about 3% lower this week. Note that capital allocation has been a key concern for the stock for a while now. In that sense, investors should have welcomed the development. However, fears of potential stress on the balance sheet if Petronet does not receive any help from its affiliates still weigh on the stock, say analysts.