Icici securities has given a hold call on Petronet LNG with a TP of `210. The current market price of Petronet LNG is `209. We met the management of PLNG to get a sense of the state of the business and its latest outlook. Here are key takeaways:
Near-term volumes remain stressed, specifically with respect to third-party regasification volumes which were based on spot LNG contracts. Of the 17.5mt capacity, 8.25+4mt or 12.25mt is based on long-term contracts, which remains unaffected by the extreme price volatility seen in spot LNG prices in the last six months. For the shortfall that is evident in CY22, PLNG has indicated that it does have a recourse to impose Take or Pay (TOP) penalties but it would actively look at deferment options given the reality of the macro environment.
