CMP Rs145, Target Rs168, Upside 15.9%
Source: Company, India Infoline Research
Source: Company, India Infoline Research
- Petronet LNG reported its Q1 FY13 revenues at Rs70.3bn which were 52% up yoy and 10.3% up qoq and in line with our estimates. This was in spite of volumes declining by 4.8% yoy and 5.2% qoq (total volumes at 127tbtu). The management attributed the lower volumes to collective shutdowns taken by its customers (mainly power and fertilizer companies) in the month of April 2012. The current utilization levels are above 100% at the Dahej terminal.
- The OPM for the quarter was recorded at 6.5% lower by 304bps yoy but better than our expectations. However, gross margins per unit of sales have increased by 11.5% yoy and 13.1% qoq, which can be attributed to higher marketing margins on spot cargos. Additionally, realizations on regasification services have also been higher in the quarter. OPM got support from lower charter hire cost due to one month dry dock for one charter (impact of Rs200mn).
|As a % of net sales||Q1 FY13||Q1 FY12||bps yoy||Q4 FY12||bps qoq|
- PAT was at Rs2.7bn (5.5% up yoy) ahead of our estimates primarily on the back of better than expected operational performance.
- On the projects side, the management guided for the following timelines:
- Gangavaram: By end of CY14, the company plans to put a FSRU (temporary floating regas unit on hire) to generate volumes of 2-3mtpa. The 5mtpa land based unit is expected to come up by end of CY16.
- Kochi: The volumes can start (~1mtpa levels) by end of CY13 with the completion of the phase-1 (44km) of Kochi pipeline. Full capacity utilisation is only expected to start after the terminal gets connected to its full customer base through the pipelines (Kochi-Mangalore; Kochi-Tamil Nadu-Bangalore) and the supplies commence from Gorgon project (CY14).
- Dahej: Expansion to 15mtpa is expected by end of CY15. Expansion of marine facilities especially the second jetty is expected to be completed by Q1 CY14. This will enable PLNG to operate beyond the 10.5mtpa levels from Dahej till the regas capacity expansion (new storage tanks and other facilities) takes place.
- Other takeaways from conference call:
- During Q1 FY13, out of the 127tbtu total volumes, 21tbtu was on short term (on 1-1.5yrs contracts). These volumes are likely to continue at the same rate for the rest of the year. Additional volumes from spot cargos will provide upsides.
- The inventory level touched 20tbtu in April (on account of customer shutdowns), but are back to normal level of 6-7tbtu currently.
- Total debt in the books was recorded at Rs30bn (Rs20bn for Kochi) as of June end.
- Management informed that the current capex focus for PLNG is the Kochi terminal and Dahej second jetty. The Dahej jetty capex is estimated to be Rs10bn, of which Rs 1bn has been incurred. On the Kochi terminal, Rs34bn has already been spent while an additional Rs10bn will be spent before the terminal is commissioned.
- The capex spend estimated for Dahej regas capacity expansion is ~Rs30bn, which will be spent in 30:40:30 ratio in the next three years until 2015.
- Demand for LNG in the domestic markets is expected to remain strong given that the gas passed power plants are being under utilized and domestic gas production is dwindling. The recent correction in international LNG prices is also likely to bring back the demand from industrial players which was impacted when LNG prices had reached US$18-19/mmbtu. Going ahead, with LNG demand from Japan expected to decline considering its strong intent to restart nuclear power plants and commencement new liquefaction capacities, we expect the prices to trend down. PLNG, with start of operations at Kochi terminal (CY13) and higher capacity at Dahej Terminal (CY14) is well placed to service the rising demand. We forecast a revenue and PAT CAGR of 29.5% and 9% respectively for FY12-14E respectively. We retain our BUY recommendation given the strong earnings visibility and reasonable valuations.
|(Rs m)||Q1 FY13||Q1 FY12||% yoy||Q4 FY12||% qoq|
|Regas services (TBTUs)||10.0||18.7||(46.6)||15.0||(33.3)|
|OPM (%)||6.5||9.5||(304) bps||6.6||(13) bps|
|Effective tax rate (%)||33.1||31.0||32.9|
|PAT margin (%)||3.9||5.6||(170) bps||3.8||1 bps|
|Ann. EPS (Rs)||14.4||13.7||5.5||13.1||10.5|
|Y/e 31 Mar (Rs m)||FY11E||FY12E||FY13E||FY14E|
|yoy growth (%)||23.9||72.0||43.1||17.1|
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