Petronet LNG’s (PLNG’s) Q3FY13 result was better than our expectation on the
EBITDA and bottom-line front. Top-line registered a growth of 33.1% YoY to
Rs84.2bn (Rs63.30bn) on account of 38% YoY growth in realisations, while the
volumes were down on YoY basis at 140.6TBTU. EBITDA/TBTU witnessed an
expansion, from Rs34.7/TBTU in Q3FY12 to Rs37.6/TBTU in Q3FY13, broadly in line
with our estimates. Bottom-line, during the quarter, stood at Rs3,185m (Rs2,954m),
an increase of 7.8% YoY as against our expectation of Rs3,003m.
! Confluence of higher spot marketing margins and higher volumes: Our
calculation suggests that the company made gross marketing profits on spot
volumes of Rs1,663m (27.4% of the reported gross margins for the quarter).
Spot volumes increased ~11.3% QoQ to 30.5 TBTU, while tolling volumes
declined QoQ to 13.5TBTU. Despite higher spot volumes QoQ, lower marketing
margins resulted in EBITDA per TBTU declining to Rs37.6 per TBTU (-2.0% QoQ).
! Outlook: We believe the benefit of strong marketing margins and utilizations at
Dahej is adequately captured into the CMP and stock price appreciation from
the current juncture will be contingent on positive developments on Kochi
terminal (increased linkages at affordable prices), coupled with timely execution
of the Phase-II pipeline. In our view, muted earnings growth over the next
couple of years, along with potential regulatory risks (overhang of potential
regulation of the re-gasification tariffs as well as marketing margins), outweighs
potential positive triggers. We maintain ‘Accumulate’ with DCF-based target
price of Rs180/share, implying target P/E of 12.4x FY14.
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