Petronet LNG Ltd. share price target

Weekly Wrap: Global yields see a leg up. February MPC Minutes: MPC points to medium-term inflation risks

Moving to pre-COVID levels despite revenue fall Petronet LNG was formed by the Indian government to import liquefied natural gas (LNG) and set up LNG terminals in India. The company operates...

Petronet LNG (PLNG) Q3FY21 profit was a beat to our and consensus estimates owing to higher spot LNG margin (Rs540 mn) and inventory gain of Rs600 mn despite lower than forecasted volume. Total volume was flattish YoY at 235tbtu, 6% below our estimate. KochiMangalore pipeline commissioned in Nov'20 and expects utilization to reach to 30% by end FY22. We believe Q4 is again going to be a challenging quarter on account of significant volatility in spot prices. We raise our FY21E EBITDA/PAT estimates by 11%/13.5% while keep FY22E/FY23E estimates largely unchanged. We expect flattish volume growth at Dahej over the next three years would restrict its growth opportunity. We downgrade the stock to...

PLNG reported volumes in line with our estimate. The beat on EBITDA was led by lower opex and inventory/trading gains. Long-term LNG prices were lower than spot prices in Jan'21, resulting in a rise in long-term offtake and decline in spot volumes. However, spot LNG prices have fallen to USD5-6/mmBtu for Apr'21 delivery. In addition to the already announced 17.5-19.5mmtpa expansion, the management has announced further expansion to 22.5mmtpa over the next 4-5 years, assuaging the long-term growth concerns of investors....

Lowest tariffs, superb pipeline network and well-entrenched reach in the domestic LNG markets to help PLNG compete with new terminals. We increase our FY21E estimates by 7% to factor in strong 9M performance and FY22/23E by 3.5/3.4% as we increase spot margins. We believe PLNG 1) is a play on India's rising LNG imports supported by benign spot LNG prices 2) possess solid business model given high earnings visibility 3) has limited...

Petronet LNG's (PLNG) Q3FY21 EBITDA outperformed estimates at Rs 13.4bn (+21% YoY).

Sharp recovery in LNG imports (up 12% y-o-y in November and continuous y-o-y growth since July) would help Petronet LNG (PLNG) to sustain high utilisation rate for its Dahej terminal. PLNG to also take 5% re-gas tariff hike for Dahej terminal from January 2021. We do not see any concern on volume outlook from the recent rise in spot LNG price as 98% of volume comes from long-term and tolling contracts. Kochi terminal utilisation to reach breakeven level of 25% by Q4FY2021. PLNG is well positioned to tap India's rising LNG consumption with 2mmt expansion at Dahej terminal, ramp-up of Kochi terminal utilisation, and focus to enter LNG retailing business....

Key takeaways from our recent interaction with the Petronet LNG (PLNG) management.

Petronet LNG's volume demand reaching pre-COVID levels, improvement in operational efficiency, and commissioning of the Kochi-Mangalore pipeline will boost performance in upcoming quarters. Hence, we reiterate our BUY rating on the stock with a revised target price of Rs. 327 based on 15.0x FY22E adj. EPS. Operational efficiency improved operating margins PLNG's Q2FY21 revenue fell 33.4% YoY to Rs. 6,236cr (+27.7% QoQ), on lower gas prices partially offset by increase in LNG volumes processed (1.6% YoY to 254 TBTUs)....

Lowest tariffs, superb pipeline network and well-entrenched reach in the domestic LNG markets to help PLNG compete with new terminals. We increase our FY21E estimates by 9% to factor in strong H1 performance, delay in commissioning of the Kochi-Mangalore pipeline and make other...