Petronet LNG - Q2FY14 Result Update - LKP Research

Spot volume decline and lower trading margin hurts operational performance

PLNG Q2FY14 operating profit of Rs3.6bn was lower than our estimate of Rs4bn mainly on account of lower spot volume and lower trading margin. Spot volume witnessed a sequential decline of 34.1% to 12.5tbtu (yoy -54.3%). Implied trading margin on spot volumes declined by 85.1% yoy to Rs6.8mmbtu, much lower than our expectation of Rs15/mmbtu, due to weak demand for spot gas. PLNG's operating margin for the quarter declined by 88bps qoq to 3.8% (yoy -303bps). We lower our earnings estimate for FY14e and FY15e by 9.6% and 3.1% to account for lower spot volumes during H1FY14. We maintain our BUY rating on PLNG with a revised price target of Rs148. At the CMP, the stock is trading at 9.7x and 5.8x FY15e EPS and EBITDA respectively.

Source : Equity Bulls

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