Buy Petronet LNG; target of Rs 190: KRChoksey

KRChoksey is bullish on Petronet LNG and has recommended buy rating on the stock with a target of Rs 190 in its October 22, 2012 research report.

“Petronet LNG Ltd. (PLL) reported profit of Rs 315 cr (above our expectations of Rs 274 cr) which was 16% up on Q-o-Q and 21% up on Y-o-Y basis. This growth backed by higher trading margins on spot volume, forex gain of Rs 114.1 cr (lower cost opf raw material). Blended re-gasification margins are improved by 7% on Q-o-Q basis, during the quarter demand of RLNG improved across the sectors helped to post total volume of 135TBTU 7% higher on Q-o-Q. Improvement in EBITDA by 7% on Q-o-Q, Net profit margins are improved by 32bps on Q-o-Q, supported by forex gain on imported LNG.”

“The commercial operations at Kochi terminal are expected to begin by Q1CY13. Volume at terminal would be less than 1mmtpa for CY13 period and will pick up after commissioning of Kochi –Bangalore pipeline by Dec-13. Total capex on Kochi stands at Rs 3600cr and expected to spend more Rs 600cr till completion. Management expects timely supply of contracted LNG from Gorgon project. Lower volume in initial years on of absence of long-term contracted LNG, Re-gasification charges would be in the range of Rs37/mmbtu to $1/mmbtu.”

“We believe the stock will be the major beneficiary of falling domestic gas volume (KG-D6) and increasing demand from the side of new refineries and power sector to keep the current capacity utilization above 100%.We believe PLL has very low exposure to regulation of margins by PNGRB hence our best pick in Indian Gas space. We recommend buy on PLL with price objective of Rs 190/share,” says KRChoksey research report.

Public holding more than 90% in Indian cos

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