Weak volumes in the quarter affected the profitability and the OPM came in weaker at 5.1%, declining 115bps sequentially and 150bps yoy.
Petronet LNG (PLNG) reported its Q4 FY13 revenues at Rs84.6bn implying a growth of 32.8% yoy and 0.5% qoq. The revenues came in line with our estimates on back of weak volume performance guided by the management. During the quarter, high LNG prices sharply affected the spot volumes and regas cargo volumes (by GAIL, GSPC) processed by PLNG. Total volumes handled in the quarter were 122tbtu, which were down by 13.5% qoq and 9% yoy. Management informed that LNG prices have now retracted to ~US$14/mmbtu levels and gas offtake is expected to be better going ahead.
Weak volumes in the quarter affected the profitability and the OPM came in weaker at 5.1%, declining 115bps sequentially and 150bps yoy. The OPM was lower than our estimates owing to higher than expected raw material costs. Material costs (as % of sales) rose by 100ps qoq and 154 bps yoy. Further, lower proportion of re-gasification and spot cargos led to the sequential decline in OPM. PAT at Rs2,451mn was lower than our estimates remaining flat yoy and declining by 23% qoq.
|As a % of net sales||Q4 FY13||Q4 FY12||bps yoy||Q3 FY13||bps qoq|
We believe that Petronet remains the best play on the current attractive dynamics in the domestic gas industry. With minimized regulatory threat and large percentage of volumes locked in long term contracts we note superior visibility in the business of the company. The stock has witnessed weakness recently owing to delays in Kochi terminal commissioning and phase-2 pipeline construction. However we believe the fundamentals remain intact and recommend BUY on the stock with a price target of Rs187.
|(Rs m)||Q4 FY13||Q4 FY12||% yoy||Q3 FY13||% qoq|
|Regas services (TBTUs)||3.7||15.0||(75.3)||14.0||(73.6)|
|OPM (%)||5.1||6.6||(150) bps||6.3||(115) bps|
|Effective tax rate (%)||36.0||32.9||31.9|
|PAT margin (%)||2.9||3.8||(95) bps||3.8||(89) bps|
|Ann. EPS (Rs)||13.1||13.1||0.0||17.0||(23.0)|
|Y/e 31 Mar (Rs m)||FY12||FY13||FY14E||FY15E|
|Revenues (Rs m)||226,959||314,674||376,656||464,988|
|yoy growth (%)||72.0||
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