Accumulate Petronet LNG Ltd For Target Rs. 393 By Geojit Financial Services Ltd
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Resilient Performance; Outlook Intact
Petronet LNG Ltd (Petronet) is a public-sector company that imports liquefied natural gas (LNG) and establishes LNG terminals in India. It operates one regasification terminal each in Dahej (17.5 MMTPA installed capacity) and Kochi (5 MMTPA).
* In Q2FY25, consolidated revenue rose 3.9% YoY to Rs. 13,024cr, supported by robust volume growth, primarily from its Dahej terminal.
* In Q2FY25, Petronet's Dahej terminal processed 225 trillion British thermal units (TBTU) of LNG, a 7.1% YoY increase, compared to 210 TBTU processed in Q2FY24. However, this represents a 9.3% decrease from the 248 TBTU processed in Q1FY25.
* On a consolidated basis, Petronet processed a total of 239 TBTU of LNG in Q2FY25, up 7.2% from the 223 TBTU processed in Q2FY24, but down 8.8% from the 262 TBTU processed in Q1FY25.
* EBITDA declined a marginal 1.0% YoY to Rs. 1,202cr, while the EBITDA margin narrowed 50bps YoY to 9.2% owing to lower utilisation.
* The Dahej terminal’s utilisation stood at 98% in Q2FY25, down from 109% in Q1FY25, but up from 92% in Q2FY24. The company expects utilisation could be in the range of 95%-100% at Dahej in the near term. Meanwhile, the Kochi terminal is currently at 22% utilisation.
Valuation
Petronet delivered a resilient performance in Q2FY25, driven by strong volume growth and solid utilisation levels. The expansion project at the Dahej terminal, slated for completion by March 2025, would increase its capacity by 5 MMTPA. Meanwhile, the resolution of the Kochi terminal's pipeline connectivity issue, expected by March/April 2025, is expected to boost its utilisation levels and drive demand from city gas distribution projects in southern Indian cities. Furthermore, progress on the petrochemical project and the expected improving utilisation at both terminals should support margins. Hence, we reiterate ACCUMULATE rating on the stock, with a revised target price of Rs. 393, based on 14.1x FY26E adjusted EPS.
over or under performance to benchmark index
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SEBI Registration Number: INH20000034
