Motilal Oswal - Petronet Lng Limited (PETRONET) MOSL: PETRONET LNG (Buy)-Lower spot LNG prices, summer demand boost volumes

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Motilal Oswal

Swarnendu Bhushan

EUR 120.00 For Business Accounts Only

MOSL: PETRONET LNG (Buy)-Lower spot LNG prices, summer demand boost volumes

PETRONET LNG: Lower spot LNG prices, summer demand boost volumes

(PLNG IN, Mkt Cap USD5.1b, CMP INR239, TP INR305, 27% Upside, Buy)

PLNG reported 1QFY20 results based on Ind-AS 116. Reported EBIDTA came in 17% higher than our estimate at INR10.2b (+10% YoY), led by lower other expenditure under the new accounting standards. Depreciation stood at INR1.9b (+86% YoY) and interest cost at INR1.0b (~3-4x). Reported PBT of INR8.4b was in line with our estimate. Adjusting for Ind-AS loss of INR516m, PBT was 3% above our estimate at INR8.9b. PAT was in line with our estimate at INR5.6b (-5% YoY, +27% QoQ).

Ind-AS 116: PLNG adopted Ind-AS 116 from 1st Apr'19, which resulted in total EBITDA impact of INR1,050m, with depreciation impact of INR860m and interest cost impact of INR820m. Other income saw an impact of INR110m.
The impact of Ind-AS is expected to be negative until 2024-25, post which it will turn positive for the profit & loss statement. We have adjusted our model for the same, with an EPS cut of ~11/8% for FY20/21.
Total volumes for the quarter were ~3% higher than estimate at 226tbtu (+3% YoY). Throughput volumes were at ~217tbtu at Dahej and ~9tbtu at Kochi. Gail’s Dabhol terminal is impacted by the lack of break water facility (during raining season) and its temporary closure has boosted service volumes for Dahej, reducing its dependence on spot volume sales. However, the company expects utilization to come down post 3QFY20, when the Dabhol terminal comes back on stream. Also during the quarter, robust summer power demand, along with lower spot LNG prices, led to an increase in power sector gas consumption.

09/08/2019 1 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)-Lower spot LNG prices, summer demand boost volumes

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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