Petronet LNG shares extend slide to hit 1-year low on Qatar supply crisis; is more pain ahead?

Shares of Petronet LNG Ltd (PLNG) extended their sharp fall for a second straight session on Friday, hitting a 52-week low of Rs 258.70. The decline comes after Iran's attack on Qatar's energy infrastructure at Ras Laffan industrial city, in retaliation for an Israeli strike on Iran's South Pars gas facility.

"Qatar's Ras Laffan LNG export facility with 77mtpa of export capacity (20 per cent of global LNG trade) is on precautionary force majeure since early March. As a result, ~40 per cent of Petronet LNG's volumes are currently unavailable. After Wednesday's retaliatory attack by Iran on the Ras Laffan facility, there is increased likelihood of supplies being impacted for at least a few months," Nomura stated.

The brokerage added that damage to key infrastructure could have longer-term implications. It cited remarks from Qatar Energy's CEO indicating that two of the 14 LNG trains have suffered long-term damage, potentially taking about 12.8 million tonnes -- roughly 17 per cent of capacity -- offline for 3-5 years.

"We also understand from PLNG's management that India-specific trains were not damaged; therefore, supplies to India might resume once the force majeure is lifted. As a result, we have cut our volume estimates for FY27F by 21 per cent as we assume no supplies from Qatar Energy for the next four months. We do not yet consider any volume impact from use-or-pay customers (~32 per cent of total available capacity) as, according to our discussion with management, use-or-pay volumes are continuing at normal rate," Nomura also stated.

Factoring in the supply disruption, Nomura has trimmed its earnings estimates and lowered its target price on the stock, though it retained a positive stance.

The brokerage has reduced its 12-month target price to Rs 340 from Rs 370 but maintained a 'Buy' rating. "As we readjust our regas volume downwards, we cut our FY26/27F EBITDA by 11 per cent/23 per cent. Volume impact on EBITDA may be party offset by 5 per cent increased regas tariff (from Jan 2026 onwards). We lower our DCF-based TP to Rs 340 (from Rs 370) as a result of our volume-led earnings cuts, while maintaining our WACC estimate at 12 per cent. PLNG currently trades at 11.7x FY27F P/E and 1.8x FY27F P/B," it said.

Despite the near-term headwinds, the revised target price still implies a potential upside of 31.43 per cent from the stock's one-year low of Rs 258.70.

Petronet LNG, a joint venture of four state-run oil and gas majors -- Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), GAIL (India) Ltd and Bharat Petroleum Corporation Ltd (BPCL) -- remains India's largest importer of liquefied natural gas (LNG), with each partner holding a 12.5 per cent stake.