Q3FY19 result highlights
Key positives: Blended EBITDA margins improve to Rs42/mmbtu
Key negatives: Utilisation at Dahej and Kochi decline
Impact on financials: Marginal cut in EPS estimates by -1.1%/-4.3% in FY19E/FY20E respectively. TP cut to Rs265. We introduce FY21E EPS of Rs19/sh
Valuations & View
Lower LNG demand environment in the country specifically from the Power sector has dented utilization for PLNG’s Dahej terminal to a 6 quarter low while concerns on capital allocation also persist given the recent update on continuing delays in the Bangladesh project. However, management decision to go ahead with another 2mt expansion at Dahej signals continued confidence in the tariff competitiveness of Dahej (vs peers) and demand prospects in the long term. We remain positive on prospects of the Sri Lanka project, with term sheets for JV agreement, GSPA submitted and financial/legal and FPSO advisor appointed for the same. We estimate a 12% EPS CAGR over FY19-21E (RoE/ROCE of 19.7/23.5% in FY21E) which we believe merits a relook after the 9% underperformance seen in last 12Mths. Reiterate outperformer.​
Petronet LNG develops, designs, constructs, owns and operates Liquefied Natural Gas (LNG) import and regasification terminals in India. Co. operates through the natural gas business segment. Co.'s terminals include Dahej LNG terminal, Kochi LNG terminal and Solid cargo port. Co. owns and operates a LNG regasification terminal with name plate capacity of 10 MMTPA at Dahej, in the State of Gujarat. Co. also has commissioned another LNG terminal with name plate capacity of 5 MMTPA at Kochi, in the State of Kerala. Solid Cargo Port Terminal has facilities to import/export bulk products, such as coal, steel and fertilizer.
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