Emkay Global Financial
Petronet LNG (Hold)
CMP: ₹257.65
Target: ₹290
Petronet LNG has reported a standalone EBITDA/PAT of ₹698 crore/₹359 crore in Q4-FY20, which is down 13 per cent/18 per cent YOY, below estimates due to IndAS 116-led forex loss of ₹178 crore on shipping and lower regas income/spot LNG marketing earnings.
Dahej terminal operated at 93 per cent capacity during Q4 (vs. our 95 per cent est), with tolling/long term volumes in line at 105/95tbtu, though spot was 6tbtu (est. 10tbtu). Kochi utilisation was better at 21 per cent (est. 18 per cent). Total volume declined 6 per cent q-o-q to 219 tbtu (up 7 per cent y-o-y).
Other expenditure included contribution of ₹100 crore to PM Cares Fund. Implied marketing margin on spot LNG was in line at $0.5/mmbtu. The negative impact of IndAS 116 on PBT was ₹238 crore in Q4.
We cut our FY21/22E EPS by 16 per cent/11 per cent, building in lower volumes due to Q1 hit and higher competition. We cut our DCF-based TP by 5 per cent to ₹290. We maintain Hold and underweight stance in EAP. The Tellurian deal is a key continuing overhang on the stock.