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Numbers in line with our estimates after stripping out one-offs
Petronet LNG (PLNG) reported Q4FY11 net revenue of INR 39.9 bn (versus
consensus INR 37.6 bn; Edelweiss estimates INR 44.1 bn) and PAT of INR 2.06
bn (versus consensus INR 1.71 bn; Edelweiss estimate INR 2.01 bn). Total
regasification sales volume jumped 5% Q-o-Q to 125.8 TBTU versus our
estimate of 126.4 TBTU, with spot volumes making up 21% (versus 16% in
Q3FY11) of the volume mix. While net realizations improved 4% Q-o-Q to USD
7.0/mmbtu, the number was below our estimate of USD 7.7/mmbtu due to
lower–than-expected spot LNG cost. Below the line, interest expenses dipped
INR 76 mn due to higher capitalisation of interest; ‘other’ expenses soared INR
108 mn Q-o-Q due to one-time charges (INR 40 mn for road development in
Kochi and INR 40 mn towards jetty maintenance); ‘other’ income saw a sizeable
INR 260 mn Q-o-Q increase, primarily due to INR 110 mn of income tax refund.
Stripping out these one-time items, PAT is broadly in line with our estimate, but
is firmly ahead of consensus numbers.
Revising up earnings on higher marketing margins, low interest costs
We are revising up our earnings estimates 5.0% and 3.2% to INR 9.2/share and
INR 12.2/share for FY12 and FY13, respectively, on higher marketing margins and
lower interest costs (refer Table 1). Total regasification volumes of 9.5 mtpa and
12.2 mtpa in FY12 and FY13, respectively, remain unchanged. We continue to
forecast incremental volume growth of 1.2 mtpa (higher spot volumes) and 2.6
mtpa (Kochi commissioning) in FY12 and FY13, respectively. Going forward, we
expect higher visibility in the company’s earnings to come from timely completion
of GAIL’s pipelines and commissioning of the Kochi LNG terminal by FY13.
Outlook and valuations: Increasing fair value to INR155/sh; maintain
‘BUY’
On back of upwards revision in our earnings numbers, we have increased PLNG’s
fair value (March 2012) to INR 155/share (from INR145/share). While the stock
has rallied 11% YTD, in-part, trigerred by: (a) lower domestic gas volumes,
primarily due to declines in KG-D6: and (b) tighter LNG supply-demand balance
following the tragic events in Japan, we still see 13% upside from current levels.
The stock trades at P/E of 14.8x FY12E EPS and 11.3x FY13E EPS. We maintain
our ‘BUY/Sector Outperformer’ recommendation/rating.
Upsides to our fair value: (i) Dahej port expansion project (INR 7/share); and
(ii) possiblility of the Section 80IA tax benefit coming through (~INR 12-14/share),
which we believe will become clear by March–June 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Numbers in line with our estimates after stripping out one-offs
Petronet LNG (PLNG) reported Q4FY11 net revenue of INR 39.9 bn (versus
consensus INR 37.6 bn; Edelweiss estimates INR 44.1 bn) and PAT of INR 2.06
bn (versus consensus INR 1.71 bn; Edelweiss estimate INR 2.01 bn). Total
regasification sales volume jumped 5% Q-o-Q to 125.8 TBTU versus our
estimate of 126.4 TBTU, with spot volumes making up 21% (versus 16% in
Q3FY11) of the volume mix. While net realizations improved 4% Q-o-Q to USD
7.0/mmbtu, the number was below our estimate of USD 7.7/mmbtu due to
lower–than-expected spot LNG cost. Below the line, interest expenses dipped
INR 76 mn due to higher capitalisation of interest; ‘other’ expenses soared INR
108 mn Q-o-Q due to one-time charges (INR 40 mn for road development in
Kochi and INR 40 mn towards jetty maintenance); ‘other’ income saw a sizeable
INR 260 mn Q-o-Q increase, primarily due to INR 110 mn of income tax refund.
Stripping out these one-time items, PAT is broadly in line with our estimate, but
is firmly ahead of consensus numbers.
Revising up earnings on higher marketing margins, low interest costs
We are revising up our earnings estimates 5.0% and 3.2% to INR 9.2/share and
INR 12.2/share for FY12 and FY13, respectively, on higher marketing margins and
lower interest costs (refer Table 1). Total regasification volumes of 9.5 mtpa and
12.2 mtpa in FY12 and FY13, respectively, remain unchanged. We continue to
forecast incremental volume growth of 1.2 mtpa (higher spot volumes) and 2.6
mtpa (Kochi commissioning) in FY12 and FY13, respectively. Going forward, we
expect higher visibility in the company’s earnings to come from timely completion
of GAIL’s pipelines and commissioning of the Kochi LNG terminal by FY13.
Outlook and valuations: Increasing fair value to INR155/sh; maintain
‘BUY’
On back of upwards revision in our earnings numbers, we have increased PLNG’s
fair value (March 2012) to INR 155/share (from INR145/share). While the stock
has rallied 11% YTD, in-part, trigerred by: (a) lower domestic gas volumes,
primarily due to declines in KG-D6: and (b) tighter LNG supply-demand balance
following the tragic events in Japan, we still see 13% upside from current levels.
The stock trades at P/E of 14.8x FY12E EPS and 11.3x FY13E EPS. We maintain
our ‘BUY/Sector Outperformer’ recommendation/rating.
Upsides to our fair value: (i) Dahej port expansion project (INR 7/share); and
(ii) possiblility of the Section 80IA tax benefit coming through (~INR 12-14/share),
which we believe will become clear by March–June 2011.
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