Petronet LNG shares fall over 6% amid PNGRB criticism and Citi's bearish outlook
Petronet LNG shares plunged as much as 6.7% on Thursday to Rs 324.05 on the BSE, pressured by critical remarks from the Petroleum and Natural Gas Regulatory Board (PNGRB) regarding tariff-related issues and a bearish note from brokerage firm Citi placing the stock under a 90-day negative watch.
PNGRB has called out Petronet LNG for profiting at the expense of gas consumers and is pushing for a framework to regulate its regasification activities. The regulator criticized the company for “profiting immensely” by annually increasing tariffs at its Dahej terminal while failing to pass on the benefits of capacity expansions and improved utilization.
Citi reiterated its “sell” rating on Petronet LNG with a target price of Rs 310, implying a downside potential of over 4% from current levels. The brokerage flagged growing regulatory risks as a key concern.
“Rising charges while capacities have increased along with over 90% capacity utilisation has led to the company (Petronet LNG) being able to profit immensely at the cost of gas consumers," PNGRB recently said in a paper, adding that “as new terminals are established nationwide, they follow the same tariff basis as Dahej, which needs reconsideration.”
The regulator believes that bringing regasification activities under its control will ensure fair pricing and more efficient use of LNG import infrastructure. Regasification is the process of converting liquefied natural gas back into its natural gas form.
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