Petronet LNG (PETRONET)

FairStock Score: 70/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 2/2 · Growth: 0/2 · Dividend: 1/1

Key Financials

Strengths

• High capital efficiency: ROCE of 25.39% and ROE of 18.30%.
• Very low leverage: Debt/Equity of 0.12 and Altman Z-score of 4.08 indicate financial safety.
• Free cash flow of ₹1,209 Cr and dividend yield of 3.09% support shareholder returns.
• Promoter holding of 50% aligns management with minority investors.
• Five-year revenue CAGR of 14.40% demonstrates past franchise growth.

Concerns

• Latest sales decline of -11.61% and profit growth of -0.15% show a stalled earnings engine.
• No margin of safety at ₹275.81: Graham Number is ₹268.89, stated margin of safety is -20.27%, and DCF value is ₹59.45.
• Piotroski F-score of 6/9 and FairStock Score of 53/100 signal mixed fundamentals.
• Negative EV/EBITDA of -102.37 is an unusual statistic that needs explanation.

AI Analysis

Let me examine Petronet LNG with a Graham checklist and a Buffett temperament. It shows the shape of a serious infrastructure business: 50% promoter holding, a debt/equity ratio of only 0.12, and an Altman Z-score of 4.08, which tells me there is no immediate danger of financial distress. The economics are respectable too: an ROCE of 25.39% and an ROE of 18.30% indicate that the company earns good returns on both total capital and equity. Free cash flow of ₹1,209 crore, plus a dividend yield of 3.09%, means shareholders get cash while the business compounds. The five-year revenue CAGR of 14.40% shows that the franchise has grown, but I cannot ignore the latest numbers: sales are down 11.61% and profit growth is -0.15%. This looks like a mature LNG supplier in a cyclical pause rather than a fast grower. At ₹275.81, the P/E is 13.34 and the P/B is 2.08 against a book value of ₹132.52. That is not a crazy price for an 18.30% ROE, but Graham taught me to buy with a margin of safety, and here I see none. The Graham Number is ₹268.89, so the market is paying a small premium to that formula. The stated margin of safety is -20.27%, which is cold water for a Graham buyer. The DCF value of ₹59.45 is far below the price, and the Piotroski F-score of 6/9 is only average. A 53/100 FairStock score reinforces my caution. This is a good business — low leverage, solid returns, and a franchise that is hard to replicate — but a good business is not always a good investment at any price. I would not chase it here. I will wait for either a lower price or a clear return to growth, because in investing, patience is a competitive advantage.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer