Motilal Oswal neutral on Petronet LNG

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Petronet LNG

PLNG’s reported significantly lower than estimated 3QFY15 EBITDA at INR3.4b (est. INR5b; -3% YoY, -34% QoQ) and PAT at INR1.6b (est INR2.5b; +20% YoY, -38% QoQ) led by (a) higher opex – more internal gas consumption in winter, (b) lower volumes – GAIL’s Dabhol terminal start post monsoon took away some cargoes and (c) lower marketing margins (we estimate to be negative) on pure short term volumes.

Dahej volumes stood at 140tbtu (est. at 149tbtu; +17% YoY, -6% QoQ). We estimate marketing margins on short term volumes at USD-0.12/mmbtu (v/s USD0.38/mmbtu in 2QFY15 and USD-0.14/mmbtu in 1QFY15).

Dahej re-gas volume at 1409tbtu (+17% YoY, -6% QoQ) with 112% utilization. This includes 94.3tbtu (+3% YOY, flat QoQ) long-term, 28tbtu (+58% YoY, -9% QoQ) third-party and 18.1tbtu (+72% YoY, -26% QoQ) short term volume. Lower spot prices coincided with lower liquid fuel prices thereby limiting any volume growth in our view.

Kochi throughput remains low at 1tbtu (v/s 1.3tbtu in 2QFY15) led by continued issues on pipeline construction (Mangalore/Bangalore line). In 4QFY15, PLNG completed one LNG storage and reloading transaction.

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"We are cutting our FY15/16/17 EPS by 10%/2%/8% led by lower marketing margins in FY15 and delay in Kochi ramp-up impacting FY17. The stock trades at 16.3x FY16E EPS of INR11.3. Maintain Neutral with price target of INR190/sh (rolling over to FY17) as we believe current valuations adequately factors near-medium term growth", says Motilal Oswal research report.

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