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Result Highlights‐ PLNG announces significant Capex program  

* 4QFY21 Profitability:

The PAT stood at Rs 6.2bn (+73.6% YoY; ‐28% QoQ) and the operating profit (EBITDA) stood at Rs 10.9bn (+56% YoY;  ‐18% QoQ). The profitability was sequentially lower on QoQ, 8% lower throughput and ~50% higher operating expense.  

* FY21 Profitability:

The FY21 Ebitda at Rs 47bn stood 18% higher YoY, even as LNG throughput stood 3% YoY lower, on higher Re‐gas tariff (5% escalation at Dahej terminal) and YoY lower operating expenses, as FY20 was market by one‐ off forex loss and CSR expenses.  

* 4Q LNG throughput:

The total throughput at 218mmbtu stood 0.5% YoY & 7.2% QoQ lower, below our estimates. The decline primarily stemmed from lower utilization of 91% (3Q: 100%) at Dahej terminal. The domestic LNG import also declined by 8.2% QoQ during the quarter and accordingly PLNG was also impacted. For the quarter the cargo mix included 113tbtu (3Q: 121tbtu) of Long Term (LT) and 7tbtu (3Q: 7tbtu) of short term (ST) cargo while 98tbtu(3Q: 107tbtu)   was re‐gas (RS) service volume, across Dahej and Kochi terminals

* FY21 LNG throughput:

The total throughput for the year stood 3.3% YoY lower at 897tbtu, comprising of LT: 431tbtu (‐1.6% YoY), ST: 26tbtu (19% YoY) and RS: 458tbtu (‐4% YoY). While ample availability and weaker LNG price helped boost imports in 4QFY20, the revers in 4QFY21 impeded the imports.  

* Dahej Terminal:

Dahej throughput for the 4Q stood at 204tbtu (3Q: 222tbtu) and 850 tbtu (‐4% YoY) for the FY21, implying a utilization of 91% for 4Q and 95% for FY21 (FY20: 103%) respectively.  

* Kochi Terminal:

Kochi throughput for the quarter stood at 14tbtu (3Q: 13tbtu) and 47tbtu for FY21(FY20: 43tbtu), implying a utilization of 22% for the 4Q and 18% for FY21 (FY20: 17%).

* Capex:

PLNG incurred a capex of Rs 5.3bn for FY21, the same is expected to be in excess of Rs 10bn for FY22, as PLNG embarks on a significant (Rs 183bn) capex program spread over next five‐six years.

* Dividend:

PLNG declared a final dividend of Rs 3.5, thereby leading to a dividend of Rs 11.5/sh for FY21 (FY20: Rs 12.5/sh)

View & Valuation

The 4QFY21 earnings for PLNG stood below our and street estimates, the miss on our estimates stemmed primarily from lower than estimated LNG throughput and higher operating expense. Abnormally higher spot LNG prices during the quarter, due to supply disruptions, impacted LNG imports in India, leading to weaker utilization for PLNG as well.  

However, we believe that near term disruptions won’t impact the long‐term prospects for growth in LNG consumption in the country. As per IEA, LNG imports in India are set to rise by 1.5x by 2025.  

In that backdrop PLNG has decided to undertake a significant capex program of Rs 183bn, spread over next 5‐6 years, including a) Rs 47.5 bn towards capacity expansion, b) Rs 15.4bn towards a green‐field terminal at Gopalpur, c) Rs 40bn towards setting up of Compressed Bio Gas plants and d) Rs 80bn towards setting up almost 1000 Auto LNG terminals, along national highways, with the intent to expand market for LNG consumption in the country. We therefore maintain our BUY rating on PLNG with a TP of Rs 330/sh as we find the stock attractively valued, trading at just 9.5x FY23e.

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