Petronet LNG (Q1 FY14)

India Infoline News Service | Mumbai |

Petronet LNG (PLNG) reported its Q1 FY14 revenues at Rs84.4bn implying a growth of 20.1% yoy and flat qoq.

CMP Rs115, Target Rs135, Upside 16.5%
  • Petronet LNG (PLNG) reported its Q1 FY14 revenues at Rs84.4bn implying a growth of 20.1% yoy and flat qoq. The revenues were in line with our estimates. The terminal continued to operate at above 100% utilisation levels and the total volumes handled in the quarter were at 129.5tbtu which was 6% higher qoq and 2% higher yoy. However the increase was mainly on account of tolling volumes which were noted at 18.2tbtu vis-à-vis 3.7tbtu in Q4FY13 and 10tbtu in Q1 FY13. During the quarter, high LNG prices and weak economic activity kept the spot demand depressed affecting the spot off-take sharply. Spot volumes at 19tbtu were down 22% qoq and 10% yoy sharply.


  • Larger share of tolling volumes and lower spot demand reflected on the profitability in the quarter, with the OPM dipping to 4.7%. The OPM was 100bps below our estimates mainly on the weaker than expected volume mix. Material costs (as % of sales) rose by 46bps qoq and 177bps yoy. PAT at Rs2,253mn was lower than our estimates, declining 8.1% qoq and 16.8% yoy.

Cost analysis
As a % of net sales
Q1 FY14
Q1 FY13
bps yoy
Q4 FY13
bps qoq
Material costs
94.3
92.5
177
93.8
46
Personnel Costs
0.1
0.1
0
0.2
(6)
Other overheads
0.9
0.9
2
0.9
2
Total costs
95.3
93.5
179
94.9
42
Source: Company, India Infoline Research
  • Key project updates:

  • Kochi terminal: The first cargo is expected to arrive in Mid-August 2013, but the volumes will remain insignificant till the pipeline connectivity to major markets of Bangalore and Mangalore will happen. Management indicated that the issues in Tamil-Nadu remain significant with the local government opposing the pipeline construction. We build in low volumes (0.2mtpa) for the first year and cut down volume estimates from Kochi in FY15. We note that the re-gasification charge for the initial years would be Rs62/mmbtu.


  • Dahej expansion: Work on Dahej second jetty is ongoing and it is expected to be ready before March 2014. It would enable more flexibility for PLNG and we incrementally build in 1mtpa volumes from FY15 at Dahej terminal. On regas capacity expansion, EPC contracts are expected to be awarded in by next quarter and the target for project is end of 2016.


  • We have liked Petronet LNG’s business owing to minimized regulatory threat and large percentage of volumes locked in long term contracts giving us superior visibility in the business of the company. However significant project delays in the Kochi pipeline would mean the uptick in volumes would be delayed beyond FY15. We cut our FY15 volume assumptions on back of low utilization levels expected at Kochi. The recent correction in stock price however factors in these negatives in our view and we note the stock trades at 8.4x FY15E. We maintain BUY with a reduced 9-month target price of Rs135.   

Result table
(Rs m)
Q1 FY14
Q1 FY13
% yoy
Q4 FY13
% qoq
Sales (TBTUs)
111.2
117.0
(4.9)
118.3
(6.0)
Regas services (TBTUs)
18.3
10.0
82.7
3.7
393.8
Net sales
84,442
70,304
20.1
84,656
(0.3)
Material costs
(79,593)
(65,025)
22.4
(79,405)
0.2
Personnel costs
(86)
(71)
21.4
(137)
(37.3)
Other overheads
(785)
(637)
23.2
(770)
1.9
Operating profit
3,978
4,571
(13.0)
4,344
(8.4)
OPM (%)
4.7
6.5
(179) bps
5.1
(42) bps
Depreciation
(467)
(459)
1.7
(468)
(0.2)
Interest
(240)
(329)
(27.1)
(247)
(2.8)
Other income
BSE 247.95 [0.70] ([0.28]%)
NSE 247.85 [1.45] ([0.58]%)

***Note: This is a NSE Chart

 

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