Sharekhan's research report on Petronet LNG
Q3FY23 adjusted PAT of Rs. 489 crore, down 34% q-o-q was 15% below our estimate due to weaker-than-expected re-gas volume of 167 tbtu (down 13% q-o-q), a decline in trading margin to just Rs. 25 crore and a forex loss of Rs. 60 crore. Reported PAT of Rs. 1,181 crore includes use or pay charge of Rs. 849 crore. Dahej terminal utilisation was weak at 69% (versus 82% in Q2FY23; 15% q-o-q fall in re-gas volume to 154 tbtu) due to lower tolling volume of 47 tbtu amid elevated spot LNG prices, demand shift to alternate fuels and procurement of HP-HT gas through gas exchange. Dahej utilization recovered to 81% currently as spot LNG price has fallen to $16-20/mmBtu and the management is hopeful to improve utilization if spot LNG price remains below $20/mmBtu . PLNG is negotiation with clients to receive use or pay charge of Rs. 415 crore (for CY21) in Q4FY23. The company assured that there will be no impact on dividend payout as it has cash of Rs. 6,900 crore on the books.
We maintain our Buy rating on Petronet LNG with an unchanged PT of Rs. 248, as valuation of 9.4x/8x its FY24E/FY25E EPS is attractive, given resilient earnings model and stock offers a 5-6% dividend yield.