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Petronet LNG’s (PLNG’s) Q4FY11 result was in line with our expectation on the
EBITDA front. However, the same was higher than our estimates on the bottom‐line.
Top‐line registered a growth of 67.1% YoY to Rs39,860m (Rs23,855m) on account of
37.1% YoY growth in volumes, coupled with 34.1% YoY growth in realisations.
EBITDA/TBTU witnessed an expansion, from Rs22.0/TBTU in Q4FY10 to Rs27.9/TBTU
in Q4FY11. Bottom‐line, during the quarter, stood at Rs2,603m (Rs973m), registering
an increase of 112.0% YoY v/s our expectation of Rs1,853m during the quarter. On
account of the recent strong outperformance, we downgrade the stock from ‘BUY’
to ‘Accumulate’.
Performance led by spot marketing margins and higher tolling volumes: During
Q4FY11, net re‐gasification margins rose by 24.3% YoY to Rs32.7/mmbtu
(Rs26.3/mmbtu) because of higher margins on the spot volumes. Our calculation
suggests that the company made a marketing EBITDA on spot volumes of
Rs389m (11.1% of the overall EBITDA for the quarter). Volumes during Q4FY11
were at 125.8TBTU (91.7TBTU); the same were higher than our estimate of
120TBTU.
Outlook: PLNG’s utility nature of business (stable re‐gasification margins and
term contracts), low regulatory risks (re‐gasification margins are not currentlyOutlook: PLNG has addressed the concerns over the utilization of capacity over and
above the fixed contracted volumes to a larger extent. Post the tie‐up of the newer
volumes, coupled with lower domestic gas output, Dahej plant was operating at
almost full capacity during the quarter and chance of significant uptick on the same
remains limited from the current levels. However, we believe that the changing
volume mix in favour of spot volumes on account of strong demand estimates is
likely to keep PLNG in good stead. Moreover, we expect gradual de‐risking of the
Kochi terminal going ahead, which augers well for the company’s business model.
While PLNG’s utility nature of business (stable re‐gasification margins and term
contracts), low regulatory risks (re‐gasification margins are not currently under
PNGRB’s purview), coupled with domestic gas shortages, has resulted in significant
re‐rating of the stock over the year. We believe that large part of the positives is
factored into the stock. On account of the recent run‐up in the stock price, we
downgrade the stock from ‘BUY’ to ‘Accumulate’, with a DCF‐based target price of
Rs148/share, implying a P/E of 11.9x and P/B of 2.6x FY2013E
under PNGRB’s purview), expanding volumes on account of strong demand
estimates and subdued spot LNG prices hold it in good stead. On account of the
same, we downgrade the stock from ‘BUY’ to ‘Accumulate’, with a DCF‐based
target price of Rs148/share, implying a P/E of 11.9x and P/B of 2.6x FY2013E
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Petronet LNG’s (PLNG’s) Q4FY11 result was in line with our expectation on the
EBITDA front. However, the same was higher than our estimates on the bottom‐line.
Top‐line registered a growth of 67.1% YoY to Rs39,860m (Rs23,855m) on account of
37.1% YoY growth in volumes, coupled with 34.1% YoY growth in realisations.
EBITDA/TBTU witnessed an expansion, from Rs22.0/TBTU in Q4FY10 to Rs27.9/TBTU
in Q4FY11. Bottom‐line, during the quarter, stood at Rs2,603m (Rs973m), registering
an increase of 112.0% YoY v/s our expectation of Rs1,853m during the quarter. On
account of the recent strong outperformance, we downgrade the stock from ‘BUY’
to ‘Accumulate’.
Performance led by spot marketing margins and higher tolling volumes: During
Q4FY11, net re‐gasification margins rose by 24.3% YoY to Rs32.7/mmbtu
(Rs26.3/mmbtu) because of higher margins on the spot volumes. Our calculation
suggests that the company made a marketing EBITDA on spot volumes of
Rs389m (11.1% of the overall EBITDA for the quarter). Volumes during Q4FY11
were at 125.8TBTU (91.7TBTU); the same were higher than our estimate of
120TBTU.
Outlook: PLNG’s utility nature of business (stable re‐gasification margins and
term contracts), low regulatory risks (re‐gasification margins are not currentlyOutlook: PLNG has addressed the concerns over the utilization of capacity over and
above the fixed contracted volumes to a larger extent. Post the tie‐up of the newer
volumes, coupled with lower domestic gas output, Dahej plant was operating at
almost full capacity during the quarter and chance of significant uptick on the same
remains limited from the current levels. However, we believe that the changing
volume mix in favour of spot volumes on account of strong demand estimates is
likely to keep PLNG in good stead. Moreover, we expect gradual de‐risking of the
Kochi terminal going ahead, which augers well for the company’s business model.
While PLNG’s utility nature of business (stable re‐gasification margins and term
contracts), low regulatory risks (re‐gasification margins are not currently under
PNGRB’s purview), coupled with domestic gas shortages, has resulted in significant
re‐rating of the stock over the year. We believe that large part of the positives is
factored into the stock. On account of the recent run‐up in the stock price, we
downgrade the stock from ‘BUY’ to ‘Accumulate’, with a DCF‐based target price of
Rs148/share, implying a P/E of 11.9x and P/B of 2.6x FY2013E
under PNGRB’s purview), expanding volumes on account of strong demand
estimates and subdued spot LNG prices hold it in good stead. On account of the
same, we downgrade the stock from ‘BUY’ to ‘Accumulate’, with a DCF‐based
target price of Rs148/share, implying a P/E of 11.9x and P/B of 2.6x FY2013E
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