Expansion Plans of Petronet LNG Likely to be a Beneficial Call for the Indian Market: Analyst

Analysts are giving a strong buy rating to the shares of Petronet LNG after the company recently updated about its growth plans in the past few weeks. Several new customers are expected to show up with the recent launch of Kochi Mangalore pipeline, following a state-owned refiner based in Mangalore already eyeing to reserve its contract purchases.

Prices of Liquefied Natural Gas from this new pipeline are linked to the global LNG prices, and as global Liquefied Natural Gas prices are under pressure while crude prices are typically rising, various clients are expected to switch towards LNG for industrial heating requirements in order to safeguard their margins.

Petronet LNG for a high profiting growth plan is likely to expand its Dahej pipeline, which will place it as the most cost reliable re-gasifier in the region. Post the expansion, Dahej plant capacity which currently stands at 17.5 million tonnes will become 22.3 million tonnes.

The company stated that in FY22, it is thinking to utilize nearly 30 percent of its overall capacity while it will slowly increase its utilization making it maximum at 50 percent in the coming years amid prevailing uncertainties over gas tariffs. Petronet, as of now is focusing on keeping the rates low since the demand is again at risk with the marginal ease in availability of US origin LNG supplies.

Petronet is a state controlled Natural Gas player in the Indian market, which operates by importing it in liquid state and converting back into its original state before supplying it to state owned fertilizers and power companies.

ChemAnalyst predicts that the recent Mangalore pipeline is much likely to strengthen LNG operational efficiency and the expansion of Dahej pipeline is likely to assist the country in attaining the stability of a very significant industrial heating alternative.