PETRONET CMP 302 TARGET 306.20 SL 299.5

PETRONET CMP 302 TARGET 306.20 SL 299.5

The stock was in an uptrend since previous session and today it opened with a gap-up and retraced to retest the ascending trendline. The price at Rs.302 has given a breakout of descending channel and hence keeps potential to hit above today’s high. The risk reward is favourable.

Domestic brokerage Motilal Oswal has upgraded its rating on Petronet LNG from ‘Neutral’ to ‘Buy’, with a target price of ₹410 per share, based on a Discounted Cash Flow (DCF) model using an 11.2 per cent Weighted Average Cost of Capital (WACC). The stock is currently reflecting an overly pessimistic scenario—a 20 per cent tariff cut at both the Dahej and Kochi terminals in FY28, no tariff hikes thereafter, and zero growth in terminal usage. According to Motilal, this assumption appears unrealistic.

The Dahej terminal, a key asset for the company, has continued to operate at near full utilisation, aided by connectivity through five major pipelines, which provide access to key demand centres. Its scale advantage—at 17.5 million tonnes per annum (mmtpa) versus an average terminal size of 5 mmtpa—enables more competitive gas pricing and superior arbitrage opportunities.

A sharp tariff cut at Dahej, however, could exert pressure across the industry, as rival terminals were constructed at nearly twice the cost (₹5 billion per mmtpa for Dahej vs ₹9–11 billion for peers). This cost edge, combined with the upcoming capacity expansion, enhances Dahej’s long-term attractiveness.