Petronet LNG Q3 Results Review - Below Expectation Barring One-Offs: Systematix

Systematix Research Report

Petronet LNG Ltd. reported better than expected Ebitda/profit after tax owing to the one-off booking of Rs 6.1 billion against use-or-pay liability for CY23 while volume came in-line with our expectations.

However, adjusting to one-off gain, Ebitda missed our estimates. Total volume stood at 232 trillion British thermal unit versus 167 tbtu YoY and 223 tbtu QoQ.

Dahej and Kochi operated at 96%/21% utilisation, respectively which is at the highest level in their last nine quarters. At Dahej, Long-term and tolling volumes were up 2%/8% QoQ to 104 tbtu/110 tbtu while total volumes came at 218 tbtu.

Petronet LNG booked Rs 6.1 billion under Use-or-Pay charges for CY23 while taking aggressive steps to recover older dues of Rs 8.5 billion for CY22 and Rs 4.3 billion for CY21. Dahej's expansion from 17.5 mtpa to 22.5 mtpa is well underway, aiming for completion by March 2025 and operations starting in April-May 2025.

For its petrochemical project, the board has approved a Rs 207 billion investment, currently finalising license selections for it.

We are raising our Ebitda/profit after tax estimates by 9.1%/10.7% for FY24E to factor in inventory gains and use or pay contractual obligations while keeps FY25E financials unchanged.

We further introduce FY26E financials and forecast Ebitda/PAT compound annual growth rate of 8.3%/2.6% during FY23-FY26E on grounds of improving utilisation rate at both the terminals.

Also, renewal of its long-term contract with RasGas would be a key trigger.

We rolled over our target price to FY26E and raised our target price to Rs 280 from earlier Rs 222, based on 12 times on FY26E. We maintain 'Hold' on the stock.

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