Buy Petronet LNG; target of Rs 300: Emkay Global Financial

Emkay Global Financial's report on Petronet LNG

Petronet LNG (PLNG) reported standalone EBITDA/APAT of Rs13.6bn/Rs9.27bn in Q2FY21, up 17%/40% yoy (50%/78% qoq) and a 22%/34% beat, led by higher-thanexpected Dahej utilization, marketing margin and Other Income, and low Other Expense. The Dahej terminal operated at 109% capacity in Q2 (101% est). Long-term/spot/tolling volumes rose 32%/67%/35% qoq to 103tbtu/5tbtu/135tbtu. Kochi utilization was 17% (inline) with spot growing qoq. Total volumes rose 2% yoy/34% qoq to 254tbtu (8% beat). Implied spot LNG marketing margin was USD3.5/mmbtu (vs. USD1.1 est), though adjusted for IndAS 116 and inventory gain, it was USD0.6. EBITDA/mmbtu rose 16% yoy/12% qoq to Rs53.7 (13% above estimate). The board declared a special interim dividend of Rs8/sh.

Outlook

We raise FY21/22/23E EPS by 14%/2%/3%, building in higher volumes/margins and lower opex for FY21E and higher Other Income overall. We retain our DCF-based TP at Rs300. Retain Buy and turn OW in EAP. Management’s pessimistic tone on Tellurian is positive.