Dolat Capital expects gas space revenue to grow by 35% YoY
Dolat Capital has come with its June quarterly earning estimates for oil & gas sector. According to the research firm, gas space revenue is expected to grow by 35% on a YoY basis, mainly due to increase in realizations.
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Dolat Capital expects gas space revenue to grow by 35% YoY
Dolat Capital has come with its June quarterly earning estimates for oil & gas sector. According to the research firm, gas space revenue is expected to grow by 35% on a YoY basis, mainly due to increase in realizations.
Like this story, share it with millions of investors on M3
Dolat Capital expects gas space revenue to grow by 35% YoY
Dolat Capital has come with its June quarterly earning estimates for oil & gas sector. According to the research firm, gas space revenue is expected to grow by 35% on a YoY basis, mainly due to increase in realizations.
Dolat Capital has come with its June quarterly earning estimates for oil & gas sector. According to the research firm, gas space revenue is expected to grow by 35% on a YoY basis, mainly due to increase in realizations.
Oil prices remained above USD 100 per barrel during first two months of quarter and have seen a decline in June month. Subsidy burden estimates would be reduced and any rupee appreciation would further lower the subsidy burden.
Refining margins have not seen any significant change from the last quarter.
IGL won the case against PNGRB and it provided a much needed booster for the gas space.
We expect PNGRB not to challenge the decision in Supreme Court in the stipulated 60 days, which ends on July 31 2012.
For the gas space, the revenue is expected to grow by 35% on a YoY basis, mainly due to increase in realizations. Volume growth is expected for IGL, Petronet LNG and Gujarat Gas (marginal growth).
Decline in KG D6 gas volume continues. GSPL and GAIL volumes are getting impacted.
Rupee has depreciated significantly from Q4FY12 levels. Spot LNG prices softened marginally. Gujarat Gas took price hikes and hence operating profitability would improve on a sequential basis. IGL has not taken any price hikes due to the court case and hence profitability would see a decline on both operating and net levels.
RLNG players would witness sequential volume growth (though in single digits) due to demand in spot market. Any further decline in spot prices could further propel the demand.
Base oil prices remained firm in this quarter. However, we expect some softening in base oil prices after the crude correction, though not up to the same extent.
Castrol would continue to witness margin pressure. However, volumes would improve on a sequential as well as YoY basis due to new marketing strategy.
Gas share in energy basket on a rise and expected to increase to 12% by 2012 from levels of 10% in 2010. Petronet LNG (PLL) is expected to play a key role in this evolution and expected to contribute 20% of the Indian gas requirement.
Continuous capacity addition to drive the revenue growth. PLL is expected to increase its capacity by 80% in the next three years.
Over and above this, PLL is planning to expand the capacity of Dahej terminal by 50% taking the name plate capacity to 15 MMTPA.
PLL does not carry the risk of rupee depreciation and neither the gas price as both the re-gasification margin and the off-take of re-gasified gas is fixed for the confirmed off-take volumes.
Supply crunch in domestic gas market due to decline in KG D6 gas volumes as well as lack of new supply from domestic sources is driving the demand for spot RLNG volumes. The operational efficiency (expected to be 10% over name plate capacity) would enable PLL to exploit the gas market dynamics by bringing in spot cargoes.
Global LNG scenario could get more favorable for PLL as prices are expected to soften going forward. This would also entail in demand propulsion for spot RLNG.
At CMP of Rs 143, the stock trades at 9.7x FY13E and 8.9x FY14E earnings. We recommend Buy with a DCF-based target price of Rs 180.
