Petronet LNG rating – Buy: Volumes were steady amidst industry decline

Preserve Purchase with new Rs 320 PT amid engaging valuation at 11x FY22E P/E (~20% disc to hist avg).

PLNG reported flat quantity y/y towards JEFe of +3%. With India’s LNG imports down 12% y/y in Q4FY21 owing to a pointy spike in Spot costs, PLNG gained 700bps market share y/y. Ebitda missed JEFe by 12% on decrease quantity and unfavourable working leverage. We reduce earnings by 6-6.5% for FY22-23E, owing to the affect on quantity from the continued COVID-related restrictions. Preserve Purchase with new Rs 320 PT amid engaging valuation at 11x FY22E P/E (~20% disc to hist avg).

Volumes: Volumes at Dahej was -1% y/y, as towards -12% for business. Utilisation at 91% was the bottom since Q1FY21 on decrease Spot vol in January owing to sharp spike in Spot LNG costs. Kochi volumes rose 8% y/y however stays a small contributor to total volumes, with ~ 95% of total volumes nonetheless coming from Dahej. General volumes have been nearly flat y/y, lacking JEFe (3% development).

Ebitda 12% beneath JEFe: Ebitda missed JEFe on decrease quantity, larger worker price owing to COVID-related provisions and higher-than-expected mounted prices leading to unfavourable working leverage. PAT missed JEFe as Different Revenue declined 56% q/q, owing to Rs 180 mn of FX losses booked through the quarter versus Rs 300 mn FX achieve in Q3FY21.

We have now reduce FY22-23E EPS by 6-6.5%: PLNG’s Q1FY22 quantity has seen some affect from the pandemic-related restrictions throughout the nation. We have now lowered our vol est for FY22-23E by 1.5%-2% and inbuilt unfavourable working leverage.

Newest home gasoline public sale has restricted unfavourable affect on LNG quantity outlook: The not too long ago auctioned 5.5 mmscmd from the brand new KG basin noticed low demand from SOE fertiliser crops, IOCL’s refineries alongside JHPL, and CGD gamers — the three key LNG-consuming segments, mitigating a key concern of home gasoline changing LNG utilization by the goal prospects of PLNG.

Preserve Purchase: We keep Purchase on PLNG with Rs 320 PT (from Rs 335 earlier), primarily based on DCF assuming a 12% CoE, additionally noting that present valuation at ~ 11x FY22E P/E is engaging within the context of management place amongst LNG operators and robust earnings visibility.