Petronet LNG shares slipped 8.5 per cent in trade on the BSE, logging an intra-day low at ₹235.45 per share. At 12:12 PM, Petronet LNG’s share price was trading 8.01 per cent lower at ₹236.95 per share. In comparison, the BSE Sensex was down 2.34 per cent at 72,790.65.
In a month, Petronet LNG shares fell 15 per cent, compared to Sensex’s fall of 10.5 per cent.
Nomura believes the company could face cash flow timing risks on its use-or-pay contracts as the West Asia conflict disrupts global liquefied natural gas (LNG) supplies, although the impact on the company’s fair value may remain limited.
The brokerage said the crisis in West Asia has taken out a meaningful portion of global LNG capacity, potentially affecting volumes tied to PLNG’s use-or-pay, or UoP, contracts.
India imported around 55 per cent of its LNG from Qatar and the UAE in 2025, Nomura said, with an estimated 60:40 split between contract and spot purchases. More than 20 per cent of India’s LNG imports were spot cargoes from the Middle East, suggesting the hit to PLNG’s actual regasification volumes could be larger than the 7.5 million tonnes linked to Qatar Energy’s volume-based contract.
Revenues may continue, but cash flow could come later
Nomura said PLNG may still be able to book revenues under its use-or-pay arrangements even if contracted LNG volumes are not immediately delivered, though the cash flows may be realised only when those volumes are eventually supplied.
The brokerage pointed to a similar episode in 2021, when spot LNG prices surged after the pandemic-led demand recovery. At that time, PLNG allowed offtakers to carry forward lost UoP volumes for up to three years, compared with one year under the original agreement, to ease pressure on customers.
Limited impact on target price from payment delays
Nomura said delays in UoP payments are unlikely to materially alter its valuation for PLNG because the issue is largely one of timing rather than permanent loss of cash flows.
Its analysis showed that if 10 per cent to 100 per cent of FY27 UoP revenues are delayed by one to three years, the impact on its discounted cash flow-based target price is minimal. In the most extreme case of 100 per cent of UoP payments being delayed by three years, the target price would fall to ₹335 per share from ₹340, implying a decline of about 1.6 per cent.
Bigger hit if UoP revenues are written off
The earnings risk becomes more significant if UoP revenues are not merely delayed but written off altogether, whether due to force majeure or other contractual issues.
Nomura estimates that FY27 Earnings before interest, tax, depreciation and amortisation (Ebitda) could be hit by 6 per cent to 60 per cent if 10 per cent to 100 per cent of FY27 UoP revenues are written off.
Even then, the impact on valuation remains relatively modest. The brokerage said the effect on its target price of ₹430 per share would be around 0.6 per cent to 5.6 per cent, since the write-off would affect only one year’s cash flows while the stock is valued on the basis of long-term discounted future cash flows.
LNG disruptions remain key monitorable
The report highlights that while PLNG’s contractual structure offers some near-term protection to reported revenues, the evolving LNG supply disruption in the Middle East remains a key risk for actual volumes, cash collections and earnings visibility.
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