In Q2FY22, Petronet LNG (PLNG) sales grew by 73.4% YoY and 25.8% QoQ to Rs108.1 billion. Standalone EBITDA decreased by 4.9% YoY to Rs 12.9 billion. Net profit declined by 11.3% YoY and increased by 29.5% QoQ to Rs 8.2 billion, mainly supported by increase in other come which grew by 19.1% YoY to Rs 816 million. The company reported total volumes of 240 Tn BTUs, up 15% QoQ, but down 6% YoY in Q2FY22.

The company has also declared a special interim dividend of Rs7 per share, maintaining a high pay-out ratio for FY22 as well. "We are revising our PAT estimates downwards by 1.3% and 2.2% for FY22 and FY23 respectively. The stock is currently quoting at PER of 9.1xFY24E and 4.7xFY24 EV/EBITDA. We resume the coverage on the Company with Hold rating and DCF based target price of Rs 266," stated IDBI Capital Equity Research.

Key highlights and investment rationale

Subdued Quarter: In Q2FY22, Petronet LNG (PLNG) sales grew by 73.4% YoY to Rs 108.1 billion. Its EBITDA decreased by 4.9% YoY to Rs 12.9 billion. Net profit also declined by 11.3% YoY.  Total volume output reported by the Company was 240 Tn BTUs, up 15% QoQ, but down 6% YoY in Q2FY22. LNG output at Dahej was at 225 tn BTUs in Q2FY22 vs 194 tn BTUs in Q1FY22 wherein Utilization at the Dahej terminal increased to 101% vs 87% in Q1FY22. Utilization at Kochi terminal was 24% as it supplied 15 tn BTUs of LNG during Q2FY22.

Outlook:  The Company’s management highlighted those orders for construction of two storage tanks at Dahej has been placed for an overall cost of Rs12 billion. The project is expected to be completed in 40 months. Also, the Company is planning to set up third jetty at Dahej at a cost of Rs 17 billion.

Valuations and recommendations: The stock is currently quoting at PER of 9.1xFY24E and 4.7xFY24 EV/EBITDA. We resume the coverage on the Company with Hold rating and DCF based target price of Rs 266.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.