Strong performance… • Petronet LNG :: ICICI Securities, pdf link

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Strong performance…
• Petronet LNG reported its Q2FY15 numbers with revenues at
| 10,980 crore (up 15.7% YoY) and PAT at | 262.8 crore (up 44.6%
YoY) in Q2FY15
• The topline was above our estimates with sales volumes at 150.5
tbtu against our estimate of 139.9 tbtu. The blended margin of
| 42/mmbtu was higher than our estimate of | 39.7/mmbtu mainly
due to higher spot/short-term volumes and margins
• Subsequently, PAT came in at | 262.8 crore, higher than our estimate
of | 226 crore
Improving performance; scenario likely to improve further
Total sales volume (long-term + spot/short-term + tolling) increased from
123 tbtu in Q2FY14 to 150.5 tbtu in Q2FY15. EBITDA increased to | 519
crore (above our estimate of | 455.2 crore) due to higher than estimated
spot/short-term margins and increase in tolling volume from 24.9 tbtu in
Q1FY15 to 30.9 tbtu in Q2FY15. Petronet’s blended margins of
| 42/mmbtu (vs. | 33.3/mmbtu in Q1FY15) is a positive sign. We expect
blended margins at | 40.1/mmbtu for FY15E and | 44.3/mmbtu for FY16E.
The performance of the Dahej terminal remained strong with higher
capacity utilisation of 117% leading to higher volumes. Commissioning of
the second Jetty at Dahej has been positive for the company. Although
the Kochi terminal became operational on September 10, 2013, volumes
at the Kochi terminal continued to be at a meagre 1.3 tbtu due to a delay
in commissioning of Phase II of the Kochi Mangalore Bangalore pipeline.
The Tamil Nadu section (connecting to Bangalore) will get further delayed
as the final decision is still pending in the Supreme Court. Therefore, we
expect a volume ramp up at Kochi only in H2FY16. Hence, Petronet has
signed an agreement with three companies including British Gas allowing
it to use the Kochi terminal for storage purpose and started supply of LNG
by trucks to nearby areas around Kochi, which will help the company to
mitigate losses. We have estimated LNG volumes of 584.5 tbtu and 610.4
tbtu for FY15E and FY16E, respectively.
Focus on contracted & tolling volumes to reduce volatility
The Dahej expansion to 15 mmtpa is on schedule and is expected to be
completed by the end of 2016. Of this 15 mmtpa capacity, 14.75 mmtpa
has been already booked. This focus on tolling volumes will reduce the
sourcing & earning volatility risk. The company has decided to undertake
a study for further expansion of 2.5 mmtpa of its Dahej plant, post which
the board will decide on the go-ahead of the project. The company has
got all the approvals for the Gangavaram terminal at Andhra Pradesh and
the management has guided that it will take three years to complete the
project. The company is awaiting the pipeline connectivity and contracts
commitment after which Petronet would go ahead for execution of the
project. This is expected to be commissioned by FY18-19 based on
demand needs. The company has asked the state government to defer
VAT on sale of gas from the terminal to make it viable. Also, the Andhra
Pradesh government has agreed to take an equity stake in the project.
Primary LNG play in India
With India continuing to be significantly short of natural gas supply,
Petronet LNG will benefit as the primary play on increasing usage of LNG.
In the long term, we expect volumes to remain strong and contribute
significantly from FY18 onwards. We have valued the stock based on DCF
methodology (WACC 12%, terminal growth 3%) to arrive at a price target
of | 216 with a HOLD rating.

LINK
http://content.icicidirect.com/mailimages/IDirect_PetronetLNG_Q2FY15.pdf