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The 4Q11 results were in line operationally, but net profit was 14% above our estimate on lower
capital costs and tax. LNG demand is set to accelerate in the next few quarters as the
government reallocates domestic gas to priority sectors. We maintain our estimates and Buy
rating and roll forward our TP to Rs160.
Results in line operationally
4Q11 regas volumes (125.75 tbtus, up 37% yoy) and EBITDA (Rs3.5bn, up 74% yoy) were in line
with our expectations. Net profit at Rs2.1bn was 14% above estimate due to lower tax and
interest/depreciation charges. The dividend has been hiked from Rs1.75 to Rs2/share in line with
expectation. The additional volume tied up for FY12 (over and above Ras Gas contracted volume
of 7.5mt) has risen from 1.1mt to 1.5mt and the company still expects the Kochi project to be
completed by 3QCY12.
LNG demand looks set to accelerate further
In line with our expectations, the Indian government (GOI) is moving to reallocate existing
domestic supply in favour of priority sectors (ie, fertiliser, power, city gas and LPG), which would
force the non-priority sectors (ie, steel, refineries and petrochemicals) to source LNG. This would
be positive for LNG demand as the non-priority sectors can afford to buy LNG at prevailing
international prices as long as it is cheaper than oil. Based on current supply from KG-D6
(50mmscmd), we believe that supply to non-priority sectors will drop by around 5mmscmd (1.4mt
of LNG per annum). Less domestic supply is forcing even power consumers in Andhra Pradesh
to buy LNG to meet peak power demand. Completion of GAIL’s HVJ/DVPL expansion in the
current quarter will connect new customers and improve GAIL’s ability to evacuate gas from
PLNG’s Dahej terminal.
Buy maintained, TP Rs160
We maintain our earnings estimates (22-24% above consensus) and Buy rating. We continue to
value PLNG in line with other power/gas utilities and roll-forward our target price to Rs160 based
on 13x FY13F EPS (previously 13.6x FY12F). We believe our new target price values the full
potential from the Dahej terminal and any further upside would depend on additional data points
showing visibility on volumes at the new Kochi terminal.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The 4Q11 results were in line operationally, but net profit was 14% above our estimate on lower
capital costs and tax. LNG demand is set to accelerate in the next few quarters as the
government reallocates domestic gas to priority sectors. We maintain our estimates and Buy
rating and roll forward our TP to Rs160.
Results in line operationally
4Q11 regas volumes (125.75 tbtus, up 37% yoy) and EBITDA (Rs3.5bn, up 74% yoy) were in line
with our expectations. Net profit at Rs2.1bn was 14% above estimate due to lower tax and
interest/depreciation charges. The dividend has been hiked from Rs1.75 to Rs2/share in line with
expectation. The additional volume tied up for FY12 (over and above Ras Gas contracted volume
of 7.5mt) has risen from 1.1mt to 1.5mt and the company still expects the Kochi project to be
completed by 3QCY12.
LNG demand looks set to accelerate further
In line with our expectations, the Indian government (GOI) is moving to reallocate existing
domestic supply in favour of priority sectors (ie, fertiliser, power, city gas and LPG), which would
force the non-priority sectors (ie, steel, refineries and petrochemicals) to source LNG. This would
be positive for LNG demand as the non-priority sectors can afford to buy LNG at prevailing
international prices as long as it is cheaper than oil. Based on current supply from KG-D6
(50mmscmd), we believe that supply to non-priority sectors will drop by around 5mmscmd (1.4mt
of LNG per annum). Less domestic supply is forcing even power consumers in Andhra Pradesh
to buy LNG to meet peak power demand. Completion of GAIL’s HVJ/DVPL expansion in the
current quarter will connect new customers and improve GAIL’s ability to evacuate gas from
PLNG’s Dahej terminal.
Buy maintained, TP Rs160
We maintain our earnings estimates (22-24% above consensus) and Buy rating. We continue to
value PLNG in line with other power/gas utilities and roll-forward our target price to Rs160 based
on 13x FY13F EPS (previously 13.6x FY12F). We believe our new target price values the full
potential from the Dahej terminal and any further upside would depend on additional data points
showing visibility on volumes at the new Kochi terminal.
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