Petronet LNG - Suffering From Classic Dutch Disease: Motilal Oswal

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Motilal Oswal Report

During nine months-FY23, Petronet LNG Ltd.’s throughput declined 14% YoY, due to record-high liquefied natural gas prices, driven by Russia-Ukraine crisis.

LNG prices have now cooled off to ~$12/metric million British thermal unit, which should lead to improvement in utilisation levels in the near term.

However, long-term growth challenges persist, due to 25% increase in domestic gas supply next year and 86% increase in LNG terming capacity over the next few years.

Additionally, the sustainability of the company’s high return ratios is a concern since return on capital employed for upcoming projects (Dahej expansion, Gopalpur floating storage and regasification unit and Dehydrogenation-polypropylene plant) is expected to be comparatively lower at 7-18%.

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Motilal Oswal Petronet LNG update.pdf

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