Petronet LNG shares rose nearly 3% after Motilal Oswal Financial Services (MOSL) upgraded the stock to a ‘Buy’ and raised the target price to ₹410 from ₹315. The brokerage believes the stock is undervalued, with current prices factoring in overly bearish assumptions, such as a steep 20% decline in tariffs at both Dahej and Kochi terminals in FY28, followed by no tariff hikes and flat terminal growth.

MOSL argues that such an extreme scenario is unlikely, and a significant tariff cut at Dahej could disrupt industry economics, especially given the higher capital costs of competing terminals. This could, in turn, boost the relative attractiveness of Dahej, particularly as its expanded capacity starts operating. With the stock trading at just 9.7 times FY27 estimated earnings and offering a 4% dividend yield, the valuation is seen as compelling.

MOSL has shifted to a discounted cash flow (DCF)-based approach for its valuation. Their revised model factors in a 10% tariff cut in FY28 at both terminals, followed by a 4% annual escalation, modest terminal growth of 2%, and a weighted average cost of capital (WACC) of 11.2%.

Petronet LNG opened at ₹304.05, touched a high of ₹307.90, and a low of ₹299.50. The stock continues to trade well below its 52-week high of ₹384.20 but remains comfortably above its 52-week low of ₹269.60.

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