Petronet LNG’s (PLNG’s) Q4FY12 result was significantly lower than our expectation on the EBITDA and bottom-line front. Top-line registered a growth of 59.5% YoY to Rs63.7bn (Rs39.8bn) on account of 7.4% YoY growth in volumes, coupled with 49.5% YoY growth in realisations. EBITDA/TBTU witnessed an expansion, from Rs34.7/TBTU in Q3FY12 to Rs36.6/TBTU in Q4FY12. Bottom-line, during the quarter, stood at Rs2,451m (Rs2,062m), registering an increase of 18.8% YoY v/s our expectation of Rs2,965m during the quarter."
"Our calculation suggests that the company made gross marketing profits on spot volumes of Rs590m (12.0% of the reported gross margins for the quarter). The share of marketing margins in overall gross margins has declined from 28% in Q3FY12 to 12% in Q4FY12. We believe, PLNG has witnessed a 68% QoQ decline in marketing margins from US$1.39/mmbtu in Q3FY12 to US$0.44/mmbtu (Q4FY12). Volumes during Q4FY12 were at 135TBTU (145TBTU in Q3FY12); the same were lower than our estimate of 144TBTU on account of inventory build-up at the tanks."
"PLNG’s utility nature of business (stable re-gasification margins and term contracts), low regulatory risks (re-gasification margins are not currently under PNGRB’s purview) and expanding volumes on account of strong demand estimates, hold it in good stead. We believe the concerns over the regulatory intervention on the marketing margin front as well as PNGRB regulating Regas charges are exaggerated. However, the concerns are duly factored in the stock price. We maintain 'BUY', with a DCF-based target price of Rs 193/share, implying a P/E of 10.0x FY13E," says Prabhudas Lilladher research report
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