Petronet LNG: Nomura keeps "Buy rating" at Rs 345 as volumes may recover from 4QFY27

Petronet LNG's EBITDA rose 26% year on year to Rs 16.3 billion in 1QFY27, helped by trading and inventory gains. However, regasification volumes fell 6% year on year as Qatar Gas' force majeure affected supplies through the quarter.

Nomura expects Petronet LNG's volumes to recover fully from 4QFY27 if Qatar Energy's force majeure is lifted during 3QFY27. The brokerage has kept its Rs 345 target price and 'Buy' rating on the stock.

Petronet LNG Q1 results

Petronet LNG's EBITDA after adjusting for trading and inventory gains stood at Rs 11.4 billion, down 1% from the previous quarter and 3% below Nomura's estimate. Regasification volumes fell 5% quarter-on-quarter and 6% year-on-year, while tolling volumes from other regions helped offset part of the decline. Adjusted profit after tax stood at Rs 8.4 billion, up 4% quarter-on-quarter but down 9% year-on-year.

Metric	1QFY27
EBITDA	Rs 16.3 billion
EBITDA growth	26% YoY
Adjusted EBITDA	Rs 11.4 billion
Adjusted PAT	Rs 8.4 billion

Volume recovery is the key factor

The fall in regasification volumes was mainly linked to Qatar Gas' supply disruption. Nomura expects the force majeure to be lifted in 3QFY27, which could help Petronet LNG return to full volumes from 4QFY27. The brokerage also said customers can source LNG from outside the Middle East when needed, reducing the impact of supply disruptions.

Trading gains may remain important

Management said Petronet LNG could see higher than usual trading gains when LNG prices are highly volatile. The company can source spot LNG during such periods, creating opportunities for additional trading gains. However, the actual benefit will depend on LNG prices and market conditions.

Large capex ahead

Petronet LNG plans to spend around Rs 90 billion each in FY27 and FY28 on its Dahej petrochemical plant and Gopalpur LNG terminal. Nomura expects free cash flow to turn negative at Rs 41-43 billion a year and net debt to reach Rs 18 billion by FY29, compared with net cash of more than Rs 100 billion at the end of FY26.

Nomura keeps Rs 345 target

Nomura has retained its Rs 345 target price and 'Buy' rating while raising its FY27 and FY28 EBITDA estimates by 3% and 1%. The main factors to watch are the recovery in LNG volumes, the timing of Qatar supply returning, trading gains and the company's high capital spending.

What is Nomura's target price for Petronet LNG?

Nomura has retained a Rs 345 target price for Petronet LNG and kept its 'Buy' rating on the stock.

Why did Petronet LNG's volumes fall in Q1FY27?

Petronet LNG's regasification volumes fell around 6% year-on-year because of the full-quarter impact of Qatar Gas' force majeure, which disrupted LNG supplies.

When does Nomura expect Petronet LNG's volumes to recover?

Nomura expects full volume recovery from 4QFY27, assuming Qatar Energy's force majeure is lifted sometime in 3QFY27.

How did Petronet LNG perform in Q1FY27?

Petronet LNG's EBITDA rose 26% year-on-year to Rs 16.3 billion in 1QFY27. Adjusted EBITDA, excluding trading and inventory gains, stood at Rs 11.4 billion, while adjusted PAT was Rs 8.4 billion.

Could trading gains support Petronet LNG's earnings?

Yes. Management said the company could see higher-than-usual trading gains from spot LNG volumes sourced during periods of high LNG price volatility. The actual gains will depend on market conditions.

What are the key factors to watch for Petronet LNG?

The main factors are the recovery in LNG volumes, Qatar supply conditions, trading gains and planned capital expenditure. Nomura has also raised its FY27 and FY28 EBITDA estimates by 3% and 1%, respectively.