Buy Petronet LNG; target of Rs 317: KR Choksey

KR Choksey's research report on Petronet LNG

Net sales came in at INR 83.8 bn (-17.0% YoY, -2.9% QoQ) from lower volumes processed at at 205 TBTU (-3.75% QoQ) on account of lower supplies to fertilizer plants due to shut down during the quarter. Operational performance was impacted due to heavy inventory losses to the tune of INR 1.19 bn for the quarter due to declining gas prices during Q4 resulting into a lower OPM at 7.5% (-204 bps YoY, -92 bps QoQ). EBITDA came in at INR 6.2 bn (-23.7% YoY, -26% QoQ). Despite higher other income (+46.4% YoY, +71.2% QoQ) and lower finance cost YoY (-32.7%) while only slightly up 4.5% QoQ, PAT was down to INR 4.4 bn (-15.8% YoY, -22.1% QoQ). NPM was down 80 bps YoY and 35 bps QoQ to 5.3%. The Board has declared dividend of INR 4.50/share on a FV of INR 10 subject to shareholders approval.

Outlook

We maintain our P/E-based multiple target price of INR 317.0 (potential upside – 41.5% ). We maintain BUY rating on the stock.