February 22, 2017 / 13:26 IST
Hereon, we expect utilisation at Dahej to stagnate on a higher base of nameplate capacity. Historically, Petronet has traded at higher valuations when RoE was +28%; however, lower RoE over the forecast period, lack of pricing power, trading at mean+SD on PE(x) on a one-year forward basis, risk of a hair-cut in regas tariffs and the possibility of non-recovery of take-pay charges make us underweight.
Outlook
We retain our Sell rating on Petronet LNG Limited (PLNG) and revise our TP to Rs 321 (earlier TP Rs 280) as we roll-forward our valuation base to Mar’19E. The company reported a robust 98.1% capacity utilisation at Dahej on higher nameplate capacity and beat our estimate of 94.6%. We infer negative trading/marketing margins which were a surprise. Additionally, reloading income at Kochi and a lower tax rate boosted PAT.
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