Buy Petronet LNG; target of Rs 319: KRChoksey

KRChoksey's research report on Petronet LNG

Net revenue was reported at INR 48,836 Mn, down 43.3% YoY (-43% QoQ) mainly due to lower capacity utilization in Q1FY21 on account of COVID-19 related nationwide lockdown. Total volume processed stood at 190 TBTU (-16% YoY, -13% QoQ) –Dahej/Kochi at 181/9 TBTU with a capacity utilization of 81/7%. EBITDA stood at INR 9,099 Mn, down 11.1% YoY (+30.5% QoQ). EBITDA margin was at 18.6%, up 675 bps YoY (up 1049 bps QoQ) driven by decrease in raw material price by 756 bps YoY and 823 QoQ as proportion of sales. PAT at INR 4,998 Mn, was down 11.1% YoY and up 34% QoQ. Sequentially higher PAT was led by better operating performance, lower depreciation & amortization expenses and reduction in finance cost. PAT margin was 10.2%, up 371 bps YoY (+588 bps QoQ). Other income stood at INR 684 Mn, down 34.5% YoY (-21% QoQ) due to lower interest on investment. EPS for the quarter stood at INR 3.3 (as against INR 3.8 in Q1FY20).

Outlook

At CMP, stock is trading at PE of 16.6x on FY21E EPS of 15.08 and P/E of 11x on FY22E EPS of 22.82. We conservatively apply a multiple of 14x on FY22E EPS and arrive a target price of INR 319 (potential upside of 27.8%). We retain our rating to BUY.