Petronet LNG - 3QFY13 Result Update - Nirmal Bang

BUY - 3QFY13 Result Update - Slower Volume Ramp-up Priced In; Upgrade To Buy

- Company posted 3QFY13 profit of Rs3,185mn (up 1.2%QoQ/7.9%YoY), in line with Bloomberg consensus estimate of Rs2,955mn and our estimate of Rs3,167mn.

- The profitability was led by a sequential improvement in RLNG (re-gasified liquefied natural gas) volume by 8% to 141tBtu, boosted by one of the highest short/spot volume of ~30tBtu, which led the utilisation level to touch 110%.

- We have upgraded our rating on the stock to Buy with a revised target price of Rs196 (12.5x FY15E earnings) from Rs183 earlier on account of: (1) Slower Kochi terminal ramp-up already factored in the stock price, (2) Edge over competitors in catering to customers in the western and northern regions via lower re-gasification margin of Dahej terminal, (3) Lower risk of customers shifting to other RLNG upcoming/existing terminals, given the company's price competitiveness, and (4) The company's stock trading at 10x one-year forward earnings compared to the past five years' average of 12.5x.

Source : Equity Bulls

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