Accumulate Petronet LNG; target of Rs 178: PLilladher

Prabhudas Lilladher is bullish on Petronet LNG and has recommended accumulate rating on the stock with a target of Rs 178 in its October 19, 2012 research report.

“Petronet LNG’s (PLNG’s) Q2FY13 result was better than our expectation on the EBITDA and bottom-line front. Top-line registered a growth of 40.7% YoY to Rs75.4bn (Rs53.66bn) on account of 41% YoY growth in realisations, while the volumes were flat on YoY basis at 135TBTU. EBITDA/TBTU witnessed an expansion, from Rs35.9/TBTU in Q1FY13 to Rs38.4/TBTU in Q2FY13, higher than our estimate of Rs35.3/TBTU. Bottom-line, during the quarter, stood at Rs3,148m (Rs2,603m), an increase of 20.9% YoY as against our expectation of Rs2,750m.”

“Our calculation suggests that the company made gross marketing profits on spot volumes of Rs1,724m (29% of the reported gross margins for the quarter). Spot volumes increased ~34% QoQ to 27.4 TBTU on the back of lower spot LNG prices (as per our calculations down ~12% QoQ to ~US$11.6/mmbtu). A combination of higher margins and volumes resulted in EBITDA per TBTU increasing to a record Rs38.4 per TBTU (+6.8% QoQ).”

“We believe the benefit of lower spot LNG prices and strong utilizations at Dahej is adequately captured into the CMP and stock price appreciation from the current juncture will be contingent on positive developments on Kochi terminal (increased linkages at affordable prices), coupled with timely execution of the Phase-II pipeline. In our view, muted earnings growth over the next couple of years along with potential regulatory risks (overhang of potential regulation of the re-gasification tariffs as well as marketing margins) outweighs potential positive triggers. We maintain ‘accumulate’ with DCF-based target price of Rs178/share, implying target P/E of 13.1x FY14,” says Prabhudas Lilladher research report.

Non-Institutions holding more than 90% in Indian cos 

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