Petronet LNG Ltd. - Lower marketing margin drags profitability - Emkay

Reco: BUY
CMP: Rs 115
Target Price: Rs 172

- PAT below our and street estimates at Rs.2.25bn, decline of 8.1% QOQ, on decline in marketing margins on spot vol. from 58cent /mmbtu in Q4FY14 to 9cent /mmbtu in Q1FY14

- Despite of lower spot LNG prices ~$14/mmbtu, we expects low marketing margin on spot volume in coming quarters, on the back of weak demand in Gujarat and other states

- As expected, volume picked up on sequential basis from 122tbtu in Q4FY13 to 129.5tbtu in Q1FY14, growth of 6.2% QoQ; Expect same volume trend in coming quarters

- Recent correction reflects concern on Kochi terminal volume offtake; However valuations looks attractive at current level, maintain Buy with revised TP of Rs.172.

Source : Equity Bulls

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