Petronet LNG - 4QFY2013 Result Update - Angel Broking

For 4QFY2013, Petronet LNG (PLNG) reported a flat net profit growth due to lower volumes and declining margins. We recommend a Buy rating on the stock.

R-LNG volumes flat yoy: During 4QFY2013, PLNG's R-LNG volumes were flat yoy at 122TBTUs. The contractual volumes stood at 97TBTUs, while spot cargo and tolling volumes were 25TBTUs mainly because of lower tolling volumes from GAIL and GSPC. However, the company's net sales grew by 32.8% yoy to Rs. 8,466cr due to higher prices of LNG during the quarter.

Higher LNG costs mute bottom-line growth: The cost of LNG regasified increased by 34.7% yoy to Rs. 7,999cr and hence the EBITDA increased by only 2.7% yoy to Rs. 434cr whereas the EBITDA margin declined by 150bp yoy to 5.1% in 4QFY2013 due to higher proportion of contractual volumes. The other income decreased by 8.4% yoy to Rs. 20cr, and therefore the net profit was flat yoy at Rs. 245cr.

Kochi terminal delayed slightly: The Kochi terminal is likely to commence commercial operations during July 2013 (earlier scheduled to begin from April 2013). The second jetty at the Dahej terminal is likely to be ready for operations by 4QFY2014.

Outlook and valuation: PLNG is well-poised to benefit from the gas demandsupply mismatch in the country. It has also lined up aggressive capex plans to increase capacity from 10.0mn tonne to 17.5mn tonne over the coming threefour years. The stock is currently trading at 9.3x FY2014E and 8.3x FY2015E EPS. Valuing the stock at 10.0x FY2015E earnings, we derive a target price of Rs. 167 and recommend a Buy rating on the stock.

Source : Equity Bulls

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