Petronet LNG Q1 Results Review— PL Capital Upgrades Rating To 'Hold' Due To Decline In The Stock Price

Petronet LNG's long-term regas volume at Dahej stood at 105TBtu vs 97TBtu in Q1 FY25 and 99TBtu in Q4 FY25. Third party volume stood at 102TBtu vs 144TBtu in Q1 FY25 and 89TBtu in Q4 FY25. In total, volume declined by 17% YoY but grew 7% QoQ.

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PL Capital Report

Total volume stood at 220 trillion British thermal units (our estimate 205 TBtu, -16% YoY, +7% QoQ). However, Petronet LNG Ltd. took an impairment of Rs 1.4 billion during the quarter on account of take-or-pay.

As a result, despite higher-than-estimated volume, the company reported an in-line Ebitda of Rs 11.6 billion (our estimate Rs 11.9 billion, Bloomberg estimate Rs 12.6 billion, -26% YoY, -23.3% QoQ). PAT came in at Rs 8.5 billion (our estimate Rs 8.1 billion, Bloomberg estimate Rs 9 billion, -25% YoY, - 20.5% QoQ).

Concerns remain on utilization of its assets amidst rising competition, especially from the recently commissioned Chhara LNG terminal and completion of breakwater facility at Dabhol LNG terminal.

Ongoing capex on petrochemical project is also expected to be return on capital employed dilutive.

We value the stock at Rs311 (previous Target Price Rs315), based on 10x (unchanged) FY27 EPS. Due to the decline in the stock price, we upgrade from ‘Reduce' to ‘Hold'.

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