Motilal Oswal - Petronet Lng Limited (PETRONET) MOSL: PETRONET LNG (Buy)-Capacity utilization remains strong

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Motilal Oswal

Swarnendu Bhushan

EUR 120.00 For Business Accounts Only

MOSL: PETRONET LNG (Buy)-Capacity utilization remains strong

Petronet LNG: Capacity utilization remains strong

(PLNG IN, Mkt Cap USD5.5b, CMP INR264, TP INR350, 33% Upside, Buy)

Volumes at Dahej were down QoQ with the Dabhol terminal resuming from seasonal shutdown. However, Dahej continued witnessing higher utilization despite competition (from Dabhol and Mundra) led by strong contracts.
The current low spot price environment bodes well for price sensitive consumers like gas-based power plants.
Also, the NGT has passed orders for the Pollution Control Boards to file compliance report on critically/severely polluted industrial clusters.
Higher adoption from industries and the power sector is likely to support volume growth for PLNG. Maintain Buy.

Marginal beat on EBITDA

PLNG reported in-line sales of INR89.1b (-12% YoY), while EBITDA of INR11.1b (+31% YoY) was marginally higher than our estimate. PBT of INR9.0b (+11% YoY) too was 5% above our estimate, with the tax rate at 25.1%. PAT came in at INR6.8b (+19% YoY, -43% QoQ – as the company re-measured its DTL in 2QFY20).
For 9MFY20, reported EBITDA increased 23% YoY to INR32.9b, while PBT was up by only 2% YoY at INR26.2b owing to higher depreciation and interest cost under Ind-AS 116. However, PAT was up 42% YoY at INR24.3b due to adoption of lower tax rate (~11% in 9MFY20 v/s 33% in 9MFY19).

12/02/2020 10 EN

Underlying

Petronet Lng Limited

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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INE347G01014 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Swarnendu Bhushan

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MOSL: PETRONET LNG (Buy)-Capacity utilization remains strong

MOSL : PETRONET LNG: Volumes dip, but outlook remains intact

For PETRONET L N G, the environment deterioration entails a downgrade to Neutral

MOSL: PETRONET LNG (Buy)-Volumes in-line; Dahej to recover

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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