Petronet LNG’s Q2 show gets a boost from good volumes, rebounding utilisations

Market


Petronet LNG’s September quarter performance got a boost from rebounding capacity utilisations. The pandemic and the ensuing mobility curbs had meant that utilisation had remained soft in the April-June quarter. The gone-by quarter, however, saw utilisations at the company’s Dahej terminal cross 100%. Re-gas volume of 225tbtu (trillion British thermal units) with utilisation at 101% beat analysts’ expectations, leading to a better-than-expected performance. The Kochi terminal utilisation was flat sequentially at 23.5%.

Petronet LNG’s standalone adjusted Q2FY22 Ebitda and net profit of 1,363 crore and 872 crore beat estimates by 20% and 24% respectively, said analysts at Emkay Global Financial Services Ltd. Ebitda was higher due to an 8% and 11% beat in volumes and margins, driven by gross spreads, they said.

The company’s management is optimistic about achieving 17.5 million tonne of volumes and full utilisation at the Dahej terminal in FY22. Demand for long term contracted LNG remains strong as it is much cheaper compared to spot LNG. With the steep rise in spot gas prices, the spot cargoes have been suffering, though. 

The expectations are that the spot gas prices will normalise by March which will boost capacity utilisations at the Kochi terminal. Analysts say that Kochi terminal utilisation can be ramped up to 30-35% from 22% now, very quickly in case of normalisation of spot LNG prices.

The company has also retained its capital expenditure guidance of 4,000 crore for Dahej terminal over three years.

Overall, analysts remain positive about the company’s prospects. Valuations are attractive at 9.9 times FY23 estimated earnings, given earnings visibility, high return of equity, free cash flow, and dividend yield of 9% and 5%, respectively said analysts at Sharekhan. 

The board has already declared a special dividend of Rs. 7/share, which implies a 3% dividend yield.

The stock gained more than1% in early deals trades on Thursday.

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