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In-line volumes; inventory loss impacts reported numbers
* Petronet LNG’s (PLNG) PAT slipped 16% yoy/22% qoq to Rs4.40bn in Q4FY19, 20% below our estimate due to inventory loss of Rs1.2bn and lower marketing margins in spot cargoes. Adjusted EBITDA/PAT was Rs8.06bn/5.20bn, a 5%/6% miss to estimates
* Dahej/Kochi terminal operated at 105%/11% capacity utilization, in line/slightly higher, with 1% overall volume growth qoq. Computed margin on spot LNG was negative at USD0.9/mmbtu on the back of plunge in gas prices. EBITDA/mmbtu fell 6% qoq to Rs39.3.
* Though the inventory loss was a negative with such an impact not seen in the past, repeat seems less likely as LNG prices stabilize going ahead. With Dahej expansion and Kochi Mangalore pipeline expected to be ready by June 2019, PLNG’s volumes should grow.
* We raise FY20E EPS by 3%, taking into account 5% Kochi tariff escalation. However, our DCF-based TP is slightly reduced from Rs290 to Rs285 (15x FY21E PE) due to an additional capex in eighth tank and third jetty. Maintain Buy rating on the stock.
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