November 21, 2016 / 18:35 IST
PLNG outperformed on all operating metrics in Q2FY17, with PAT surging 82% YoY to Rs 4.6 bn. Earnings growth was led by (a) a surge in EBITDA to Rs 7.3 bn (+54% YoY) or Rs 38/mmbtu (+28% YoY) and (b) higher volumes at 189 tbtu (+21% YoY, +12% QoQ) as new capacity started contributing. EBITDA expansion trends are fructifying earlier than expected. We upgrade PLNG’s FY17/FY18 earnings by 24%/7% on higher volumes and margins, while largely maintaining FY19 earnings. Our Sep’17 TP rises 5% to Rs 400. Restate BUY.
Valuations at 11x FY19E EPS are attractive considering the high visibility in earnings growth from long-term contracts. We raise FY17/FY18 volume estimates by 9%/3% and margins by 15%/5%, leading to an upgrade in earnings. We expect concerns over Kochi terminal operations to continue on low utilisation and expect an operational break-even by FY20. Volumes at Kochi could improve by 0.5mmt in Q1FY18 on completion of BPCL’s Kochi refinery expansion.
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