Accumulate Petronet LNG; target of Rs 301: Dolat Capital

Dolat Capital's research report on Petronet LNG

PLL Q1FY21 numbers were in line with estimates on revenue front. It reported depressed performance due to Pandemic as demand was tepid. Profitability was above estimates due to adoption of IndAs. Operating expenses were significantly lower than our expectation. The overall volumes were 190 TBTU in Q1FY21. Volume at Dahej was 181 TBTU, and Kochi volumes and capacity utilization remained low. Given gradual capacity addition and increase in re-gasification margins, PLL is likely to benefit from the gas demand evolution in India. PLL is also poised to benefit from the uptick in gas demand and the setting up of small scale LNG stations which will consume 8-9 MMTPA of LNG.

Outlook

However, Q1FY21 was a low volume quarter, which have now recovered and Q2 is expected to be close to 100% capacity utilization, with industries starting up and higher offtake of gas from Power and other industries as spot LNG prices are low. We believe the stock should be re-rated, after the completion of pipelines for the Kochi terminal. We maintain our Accumulate rating with a DCF-based target price of Rs 301.