Accumulate Petronet LNG; target of Rs 183: Angel Broking

Angel Broking is bullish on Petronet LNG and has recommended accumulate rating on the stock with a target of Rs 183 in its October 19, 2012 research report.

“Petronet LNG (PLNG reported a strong growth in ) For 2QFY2013, its net profit on account of high marketing margin on its short-term contracts. During 2QFY2013, PLNG’s R-LNG volumes were flat at 135TBTU. The contractual volumes stood at 90TBTUs, while spot cargo and tolling volumes stood at 45TBTUs. The average realization improved by 39.7% yoy to Rs555/mmbtu. Therefore, net sales increased by 40.7% yoy to Rs7,549cr.” 

“The EBITDA/mmbtu increased 15.7% yoy to Rs38.4 mainly on account of higher margins from spot cargoes; however, the EBITDA margin declined by 149bp yoy to 6.9% in 2QFY2013. Other expenditure also increased by 52.9% yoy to Rs80cr. Hence, despite a higher growth in net sales, the EBITDA increased by only 15.6% yoy to Rs518cr. Other income increased by 23.1% yoy to Rs25cr, while the tax rate also increased to 32.3% in 2QFY2013, compared to 30.8% in 2QFY2012. Hence, the net profit grew by only 20.9% yoy to Rs315cr.”

“PLNG is well-poised to benefit from the gas demandsupply mismatch in the country. It has also lined up aggressive capex plans to increase capacity from 10.0mn tonne to 17.5mn tonne over the coming three years. The stock is currently trading at 11.2x FY2013E and 11.1x FY2014E EPS. Valuing the stock at 12.0x FY2014E earnings, we derive a target price of Rs183 and recommend an accumulate rating on the stock,” says Angle Broking research report.

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