High volumes had also accompanied the scrip’s rally over the past three days, when it had risen 4.6% to Rs 47.05 on 14 May 2007, from Rs 44.95 on 9 May 2007.

The daily volume during this three-day period was 16.7 lakh shares to 39.9 lakh shares on BSE compared with an average daily volume of 5.5 lakh shares in the past one year.

The scrip was range bound in second half of April 2007-early May 2007 after it had witnessed a pre-results run-up in the first half April 2007. From Rs 41.25 on 2 April 2007, the stock had surged to Rs 46.45 on 16 April 2007, the day when it had announced strong Q4 March 2007 results.

Petronet LNG (PLL) reported a 63% growth in operating income to Rs 1538.83 crore in Q4 March 2007, aided by 22% volume growth. Even as the operating profit margin weakened significantly, the company maintained a 60% growth in the bottom line to Rs 106.03 crore in Q4 March 2007 due to the spurt in other income and stagnating interest and depreciation costs.

PLL has a 25-year contract to buy LNG from Qatar’s Rasgas. Through this contract, PLL currently imports five million tonnes (mt) at its Dahej terminal and will start importing 2.5 mt more from 2009. The company is planning to increase capacity of the Dahej terminal to 10 mt per annum by 2008-09. Its 2.5-mt per annum capacity at Kochi LNG terminal, with provisions for expansion up to 5 mtpa, is to be commissioned in 2010.

PLL’s major customers are Indian Oil Corporation, BPCL and Gail India.

PLL has benefited from favourable demand-supply dynamics in the domestic natural gas sector. India faces an acute supply shortage, which is expected to continue despite the expected increase in domestic gas supplies due to recent gas finds. The increased government focus on the sector, through initiatives such as the establishment of a separate gas regulatory authority, implementation of a national gas grid and deregulation of gas prices should enhance demand, analysts reckon.

The demand for natural gas in the country has been estimated at 179.27 million standard cubic metre per day (MSCMD) in 2007-08, whereas the domestic production is estimated at 70.54 MSCMD.

The current market price of Rs 50.70 discounts PLL's Q4 March 2007 annualised EPS of Rs 5.7 by a PE multiple of 8.89.