Emkay Global Financial's research report on Petronet LNG
PLNG’s Q2FY23 results beat our estimates by 12-13%, driven by higher spot LNG marketing earnings, as its volume rose from 1tbtu to 2tbtu QoQ. This was despite lower overall volumes, as Dahej operated at ~80% capacity vs our expectation of ~86%. EBITDA/PAT of Rs11.7bn/7.4bn grew 10%/6% QoQ. Gross profit was at an 8% beat, with implied marketing margin at USD26-27/mmbtu. Other expenses were also down, by 17% QoQ to Rs2.1bn, standing 4% lower than our estimate, while employee cost was down 23% YoY. Long-term Dahej volumes were up 2% QoQ to 103tbtu, while tolling fell 18% QoQ to 77tbtu. Kochi saw 16% utilization (in-line), with term volume of only 10tbtu (vs 12tbtu QoQ). Overall EBITDA/mmbtu rose 19% QoQ to Rs61.1 (up 8% YoY). PLNG has declared a special interim dividend of Rs7/share (vs. Rs8 YoY). It extracted more gas from internal consumption, selling the excess in the spot market at high premiums, thus driving earnings, which is creditable.
Outlook
We lower our volume assumptions, but raise EBITDA/mmbtu, which results in only a slight change in overall earnings estimates and the Sep-23 TP (Rs260/sh) remaining unchanged; retain BUY. The Board has approved the East-coast terminal at Gopalpur, Odisha (4mmtpa capacity, Rs23bn capex), though we have not built it in our estimates.
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