26042012105836 petronet q4fy12 result update (1)

Quarterly Result Update

Petronet LNG Ltd.

Below expectations….growth story still holds true…

Wednesday, 25

th April, 2012

.

Outlook

While maintaining a BUY on the stock of Petronet LNG (PLL) we have cut our target price to Rs 175 (8.7x FY14

valuations) as significant headwinds in terms of pricing pressures, step up nature of the input cost pricing could

affect fortunes. In addition any clamp down by PNGRB on marketing margins ( a la Indraprastha Gas Ltd) could

seriously dent marketing margins and is always a hanging sword. Also PLL has maximised efficiencies of its

facilities and further increments in capacity utilizations from the current 107% seem unlikely.

Although there is strong visibility on volume growth, capacity expansion is backended for FY13 and hence the

stock is expected to remain an underperformer for a couple of quarters. The commencement of the Kochi terminal

and jetty expansion activity at the Dahej terminal is expected to lead to significant ramp up in capacity from

Q4FY13. However the proposed dilution of equity to raise resources to the tune of Rs 1500-2000 crores for its

planned 5 MMTPA facility at Gangavaram, Andhra Pradesh would lead to dilution of future earnings

However current valuations still remain attractive (given the adverse macro backdrop for corporate earnings) and

our target price of Rs 175 provides a possible 25.7% upside from the current levels.

Key Takeaways

Petronet LNG’s revenues for Q4FY12 stood at Rs 6375.4 crore (growth of 0.7% qoq) below expectations on

the back of lower volumes (136 tbtus, -6.0% qoq) and improved realizations (+6.7%). The long term LNG for

the quarter was priced ~ $8.5 mmbtu while the spot cargoes price ranged between ~ $14-18 / mmbtu. The

net profit stood at Rs 245.1 crore (growth of 18.8% yoy and -17.0% qoq). For the financial year, the net sales

stood at Rs 22695.9 crore while the net profit stood at Rs 1057.5 crore.

During the year, the company brought in a total of 226 cargoes including 171 long term cargoes and 34 spot

cargoes and 21 cargoes for regasification services. The falling gas output from KG D6 (below 35 mmscmd),

one of India’s major gas finds, has led to an enhanced demand for LNG coming from the industrial segments

and sectors left unmet by KG D6. However, given the rising LNG prices and lack of adequate infrastructure,

the company is facing slight difficulties in enhancing its customer base and sell LNG. However, the

Recommendation (Rs)

CMP 139 Rating BUY

Index Details

Sensex 17,151

Nifty 5,202

Industry Utilities

Scrip Details

Mkt Cap (Rs Cr) 10,447

Eq Shares O/s (Cr) 75.0

Avg Vol (Lakhs) 6.1

52 Week H/L 186/126

Dividend Yield (%) 1.7

Face Value (Rs) 10.0

Latest shareholding pattern (%)

Promoters 50.0 Indian Institutions 7.1 FII’s 14.3 Public 28.6 Total 100.0

Stock performance (%)

1m 3m 6m

Petronet -10.2 -8.2 -9.6 Nifty -1.0 1.9 2.4 BSE – Oil -1.5 -4.1 -9.8


Wednesday, 25th April, 2012

management remains positive on its ability to market additional volumes. Even at the current prices, LNG is

cheaper than some alternative fossil fuels. The company utilized the Dahej Terminal at 107% utilization levels

during the year. The company expects to maintain the current run rate in till additional jetty is commissioned

in December 2013.

Petronet’s Kochi Terminal is expected to be available for commercial operations in Q4FY13, after factoring in

a delay of 3 months. The company has already spent Rs 3,000 crore on the terminal and expects to spend

another Rs 1,400 crore over a period of 12 months. We have factored in lower volumes of 1.1 mtpa for the

Kochi Terminal considering the new market and lack of adequate gas network.

The additional jetty at the Dahej Terminal is also expected to commission in Q4FY13. Post the

commissioning of the additional jetty, the capacity of the Dahej Terminal would be enhanced to 12.5-13

MMTPA from the current 10 MMTPA. The company is also planning to set up two storage tanks and a

vaporizer. Post the completion of the expansion, the Dahej capacity is expected to be enhanced to 15

mmtpa.

In FY14, post commissioning of the Kochi terminal, the company plans to raise Rs 1500-2000 crore for the 5

MMTPA terminal in the East Coast at Gangavaram, Andhra Pradesh.



Description Q4FY12 Q4FY11 % Chg. Q4FY12 Q3FY12 % Chg. FY201203 FY201103 % Chg.

Net Sales 6322.8 3940.6 60.5 6322.8 6257.6 1.0 22450.7 13105.8 71.3

Other operational Income 52.7 45.4 15.9 52.7 72.6 -27.5 245.2 91.5 167.9

Total Oper. Income(TOI) 6375.4 3986.0 60.0 6375.4 6330.3 0.7 22695.9 13197.3 72.0

Raw Materials Cons.- 5939.3 3574.3 66.2 5939.3 5700.6 4.2 20586.7 11801.2 74.5

% to TOI 93.2 89.7 - 93.2 90.1 - 90.7 89.4 -

Stock adj. (-)Inc / (+)Dec- 0.0 - 0.0 0.0 - 0.0 0.0 0.0

% to TOI 0.0 - - 0.0 - 0.0 0.0 -

Net Raw Mat adj. for stock 5939.3 3574.3 66.2 5939.3 5700.6 4.2 20586.7 11801.2 74.5

% to TOI 93.2 89.7 93.2 90.1 - 90.7 89.4 -

Other expenses 59.9 47.7 25.4 59.9 120.0 -50.1 212.2 149.4 42.0

% to TOI 0.9 1.2 - 0.9 1.9 - 1.1 1.1 -

Contribution Net_Sales 376.3 363.9 3.4 376.3 509.7 -26.2 1859.0 1246.7 49.1

Personnel 10.8 12.2 -11.6 10.8 6.4 68.6 29.8 30.6 -2.6

% to TOI 0.2 0.3 0.2 0.1 - 0.1 0.2 -

Total expenditure 6010.0 3634.2 65.4 6010.0 5827.0 3.1 20828.7 11981.2 73.9

Operating Profit 365.5 351.7 3.9 365.5 503.3 -27.4 1867.2 1216.1 53.5

% to TOI 5.7 8.8 5.7 8.0 - 8.1 9.2 -

Non-Operating Income 79.6 31.4 154.0 79.6 16.4 385.6 84.9 68.4 24.2

Interest 34.2 43.6 -21.5 34.2 34.5 -0.8 177.4 193.4 -8.3

Exceptional Items 0.0 0.0 0.0 0.0 0.0 0.0 38.0 0.0 0.0

Gross Profit 410.9 339.5 21.0 410.9 485.2 -15.3 1736.7 1091.1 59.2

Depreciation 45.8 45.5 0.8 45.8 46.3 -1.0 184.2 184.7 -0.3

PBT before Extra-ord 365.1 294.1 24.2 365.1 438.9 -16.8 1552.5 906.4 71.3

% to TOI 5.7 7.4 - 5.7 6.9 - 6.8 6.9 -

Extraordinary Items 0.0 - 0.0 0.0 - - 0.0 0.0 0.0

PBT 365.1 294.1 24.2 365.1 438.9 -16.8 1552.5 906.4 71.3

Tax Rate 32.9 29.9 10.1 32.9 32.7 0.5 31.9 31.6 0.8

Prov. for Tax 120.0 87.8 36.7 120.0 143.5 -16.4 495.0 286.8 72.6

% to TOI 1.9 2.2 - 1.9 2.3 2.2 2.2 -

Profit after Tax 245.1 206.3 18.8 245.1 295.4 -17.0 1057.5 619.6 70.7

% to TOI 3.8 5.2 - 3.8 4.7 - 4.7 4.7 -

Face Value 10.0 10.0 - 10.0 10.0 - 10.0 10.0 -

Equity Share capital 750.0 750.0 - 750.0 750.0 - 750.0 750.0 -

EPS (Rs.) 3.3 2.8 18.8 3.3 3.9 -17.0 14.1 8.3 70.7

CEPS (Rs.) 3.9 3.4 15.6 3.9 4.6 -14.9 16.6 10.7 54.4



P/E Bands

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NIFTY Comparison

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BSE- Oil Index Comparison

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Sales Volumes Regasification (Tbtus)

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Sales, EBIDTA & PAT Margin (%) Sales Volumes & Regasification



Financials & Projection

Y/E March, Fig in Rs. Cr FY 2011 FY 2012e FY 2013e FY 2014e Y/E March, Fig in Rs. Cr FY 2011 FY 2012e FY 2013e FY 2014e

Profit & Loss Statement Per Share Data (Rs)

Net Sales 13197.3 22695.9 21832.4 30534.2 EPS 8.3 14.1 12.3 15.9

% Chg. 72.0 -3.8 39.9 Cash EPS 10.7 16.6 15.4 21.5

Total Expenditure 11981.0 20866.6 20078.0 28003.5 DPS 2.0 2.0 2.0 2.0

% Chg. 74.2 -3.8 39.5 Book Value 35.7 46.9 56.4 69.4

EBDITA 1216.3 1829.2 1754.5 2530.7 Capital, Liquidity, Returns Ratio

EBDITA Margin % 9.2 8.1 8.0 8.3 Debt / Equity (x) 1.2 0.9 1.1 1.1

Other Income 68.0 84.9 87.2 90.2 Current Ratio (x) 1.1 1.4 2.2 2.0

Exceptional items 0.00 0.00 0.0 0.0 ROE (%) 23.1 30.0 21.9 23.0

PBDIT 1284.3 1914.1 1841.7 2620.9 ROCE (%) 21.8 29.2 21.0 24.4

Depreciation 184.7 184.2 227.3 418.9 Dividend Yield (%) 1.4 1.4 1.4 1.4

Interest 193.2 177.4 252.9 443.3 Valuation Ratio (x)

PBT 906.4 1552.5 1361.6 1758.7 P/E 16.9 9.9 11.3 8.7

Tax Provisions 286.8 495.0 435.7 562.8 P/BV 3.9 3.0 2.5 2.0

Reported PAT 619.6 1057.5 925.9 1195.9 EV/Sales 0.9 0.6 0.6 0.4

PAT Margin (%) 4.7 4.7 4.2 3.9 EV/EBIDTA 10.3 6.8 7.1 4.9

Efficiency Ratio (x)

Manpower cost / Sales (%) 0.2 0.1 0.2 0.1 Inventory (days) 7.7 10.0 10.0 10.0

Other Exp / Sales (%) 0.1 1.0 0.1 0.1 Debtors (days) 23.4 25.0 25.0 25.0

Tax Rate (%) 31.6 31.9 32.0 32.0 Creditors (days) 32.0 18.0 17.0 17.0

Balance Sheet Cash Flow statement

Share Capital 750.0 750.0 750.0 750.0 Profit After Tax 619.6 1057.5 925.9 1195.9

Reserves & Surplus 1930.2 2769.8 3476.3 4452.9 Depreciation 184.7 184.2 227.3 418.9

Minority Interest & Others 0.0 0.0 0.0 0.0 Working Capital Changes -61.3 53.6 -927.3 -362.9

Total Loans 3216.1 3034.0 4560.6 5540.6 Others 14.2 29.5 0.0 0.0

Deferred Tax Iiability 0.0 0.0 0.0 0.0 Operating Cash Flow 757.2 1324.9 225.8 1252.0

Total Liabilities 5896.3 6553.8 8786.9 10743.5 Capital Expenditure -888.7 -1090.4 -1685.0 -1985.0

Goodwill 0.0 0.0 0.0 0.0 Change in Investment -626.3 1025.0 -14.0 -23.1

Gross Block 3553.7 3997.0 8262.0 9062.0 Cash Flow from Investing -1515.0 -65.4 -1699.0 -2008.1

Less: Acc. Depreciation 851.3 1035.5 1262.8 1681.6 Proceeds from equity issue 0.0 0.0 0.0 0.0

Net Block 2702.4 2961.5 6999.2 7380.3 Inc/ Dec in Debt 716.3 -182.2 1526.7 980.0

Capital Work in Progress 2202.9 2850.0 270.0 1455.0 Dividend and DDT -145.0 -247.5 -219.4 -219.4

Investments 1164.9 139.9 153.9 176.9 Cash Flow from Financing 571.3 -429.6 1307.3 760.6

Net Current Assets 174.1 965.4 1726.8 2094.2 Net Change in Cash -186.5 829.9 -165.9 4.5

Deferred Tax Assets -348.0 -363.0 -363.0 -363.0 Opening Cash Balance 340.5 154.0 983.9 818.0

Total Assets 5896.3 6553.8 8786.9 10743.5 Closing Cash Balance 154.0 983.9 818.0 822.6



Ventura Securities Limited Corporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai – 400079 This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither Ventura Securities Limited nor any of the contributors accepts any liability arising out of the above information/articles. Reproduction in whole or in part without written permission is prohibited. This report is for private circulation.

26042012105836 petronet q4fy12 result update (1)

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