Motilal Oswal's research report on Petronet LNG
Petronet LNG (PLNG) reported in-line EBITDA of INR9.4b during the quarter. Dahej utilization improved to 77%, while utilization at Kochi stood at 21%. Spot LNG price has dropped to ~USD11/mmBtu thereby driving up utilization levels at Dahej terminal to ~97% in Apr’23. Management expects utilization levels to remain healthy going forward if LNG price sustains at current level. Management also highlighted that utilization at Kochi terminal may reach 35% in FY25E from 21% currently, if GAIL’s Kochi-Bangalore pipeline is completed by Nov’24. Despite near-term improvement in volumes, long-term volume growth prospects remain bleak for the company, due to intensifying competition from upcoming LNG terminals as well as increasing domestic gas supply.
Outlook
As highlighted in our previous report, sustainability of high return ratios also remains a key concern for PLNG as the ROCE for upcoming projects (Dahej expansion, Gopalpur FSRU and PDH-PP plant) is likely to be lower comparatively at 7-18%. Hence, we reiterate our Neutral rating with a TP of INR225.
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