Company Update : Petronet LNG Ltd By Motilal Oswal Financial Services Ltd
Weak operating performance; beat on EBITDA led by the UoP reversal
* Petronet LNG’s 4QFY25 EBITDA came in 21% above our estimates, as the UoP provision of INR2.3b was reversed during the quarter. EBITDA adjusted for UoP provision reversal stood in line with our estimates. Total volumes came in 8% below our estimates, primarily due to lower third-party cargos. Dahej utilization was 9% below estimates, while Kochi utilization stood 6% above est. During the quarter, PLNG received INR3.6b w.r.t the CY21 UoP dues. Additionally, some customers brought LNG quantities up to 31 Mar’25, for which revenue was recognized at the prevailing regasification rate. We note that while spot LNG prices were high, averaging USD14/mmbtu in 4Q (similar QoQ), the current spot LNG prices are at ~USD11.5/mmbtu.
* In 4QFY25, revenue came in 9% below our estimate, as total volumes were 8% below our estimate.
* We note that spot LNG prices were high in 4Q, averaging USD14/mmbtu (similar QoQ).
* However, EBITDA was 21% above our estimates at INR15.1b (+37% YoY), as UoP provision amounting to INR2.3b was reversed. EBITDA adjusted for UoP provision reversal stood in line with our estimates.
* During the quarter, PLNG received INR3.6b w.r.t the CY21 UoP dues. Additionally, some customers brought LNG quantities up to 31 Mar’25, for which revenue was recognized at the prevailing regasification rate. The company has not waived off any UoP dues during the quarter.
* Reported PAT also stood 26% above our est. at INR10.7b (+45% YoY), with other income and tax coming in above our estimate.
* Operational performance:
* Total volumes came in 8% below our estimates, primarily due to lower third-party cargos.
* Dahej utilization was 9% below estimates, while Kochi utilization stood 6% above our estimate.
* In FY25, while net sales were similar YoY at INR510b, EBITDA/PAT were 6%/11% up YoY at INR55b/ INR39b. In FY25, PLNG has waived off UoP charges of INR1.8b (nil in 4Q).
* As of Mar'25, provisions on UoP dues stood at INR4.7b.
* UoP dues of INR14.2b (net provision INR9.5b) were included in trade receivables as of Mar'25. The company has obtained bank guarantees from customers to recover UoP charges. While some customers have not given balance confirmations for these dues, the management is confident of recovering such charges.
* The Board recommended a final dividend of INR3/sh (FV: INR10/sh).
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