Emkay Global Financial Services is bullish on Petronet LNG and has recommended buy rating on the stock with a target of Rs 170 in its October 18, 2011 research report.
“Petronet LNG reported results which were above our and street expectation at bottom line. Revenue for the quarter was at Rs.53.6bn, growth of 75.5% YoY, mainly due to higher offtake of both firm and spot volumes plus higher regasification charges compared to last year. EBITDA during the quarter was at Rs.4.5bn (against our estimate of Rs.4.3bn), growth of 65%, YoY. EBIDTA margin has marginally declined by 53bps YoY to 8.4% (-112bps QoQ). The sequential decline in margin was mainly attributable to higher other expenditure. During the quarter the company reported net profit of Rs.2.6bn, (as against our estimate of Rs.2.4bn), growth of 98.6% on YoY basis.”
“Revenue has increased by 75.5% from Rs.30.5bn in Q2FY11 to Rs.53.6bn in Q2 FY12, due to higher growth of both firm (~91tbtu) and short term (~44.08tbtu) volume and higher regasification charges drives the revenue and profitability. During the quarter overall volumes (Firm + Spot + Regasification) have increased by 35.7% to 135tbtu (+1.3% QoQ), mainly on account of short fall of domestic gas source (KG D6 + PMT). We expect volume would further increase in the future as domestic natural gas supply continues to fall short to meet the growing demand. During the quarter company has achieved 106% capacity utilization rate. This is second consecutive quarter in which company has achieved highest capacity utilization. As per the management capacity utilization will improve further from current level for next couple of quarters. However we expect 106% (10.6mtpa) capacity utilization for FY12E and 108% (10.8mtpa) for FY13E.”
“We expect volume growth would sustain in the coming quarter, as domestic natural gas supply continues to fall short to meet the growing demand. We have positive bias on Petronet LNG, given the huge demand for imported LNG in the domestic market, expected increase in re-gasification charges and improvement in operating margin. Currently, stock trades at 12.7x FY13E EPS and 2.8x P/BV, we maintain BUY rating on Petronet LNG with target price of Rs 170,” says Emkay Global Financial Services research report.
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