Accumulate Petronet LNG; target of Rs 249: Dolat Capital

Dolat Capital's research report on Petronet LNG

PLL Q4FY19 revenue and profitability were below our estimates, due to lower off-take from the Dahej terminal. The volume was 205 TBTU for Q4FY19, while profits were impacted by an inventory loss of ` 119 crore. Spot price of natural gas has fallen from $8.5 per mBtu at beginning of quarter to $4.3 per mBtu. This loss was a notional loss as per the IndAS valuation of inventory for the quarter. The Dahej terminal’s capacity utilization continues to be 104%. The Kochi terminal’s utilization remains low at 10% and is only expected to improve after the completion of the Kochi-Mangalore pipeline in June 2019. Given gradual capacity addition and increase in re-gasification margins, PLL will ride the gas demand evolution of India. PLL is poised to benefit from the gas demand.

Outlook

We believe the stock should be re-rated, after the completion of pipelines for the Kochi terminal. We reiterate our Accumulate recommendation, with a target price of ` 249.