26042012105836 petronet q4fy12 result update (1)

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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.

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26042012105836 petronet q4fy12 result update (1)

  1. 1. Quarterly Result UpdatePetronet LNG Ltd.Below expectations….growth story still holds true… Outlook Recommendation (Rs) CMP 139 While maintaining a BUY on the stock of Petronet LNG (PLL) we have cut our target price to Rs 175 (8.7x FY14 Rating BUY 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 Index Details seriously dent marketing margins and is always a hanging sword. Also PLL has maximised efficiencies of its Sensex 17,151 facilities and further increments in capacity utilizations from the current 107% seem unlikely. Nifty 5,202 Industry Utilities 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 Scrip Details and jetty expansion activity at the Dahej terminal is expected to lead to significant ramp up in capacity from Mkt Cap (Rs Cr) 10,447 Q4FY13. However the proposed dilution of equity to raise resources to the tune of Rs 1500-2000 crores for its Eq Shares O/s (Cr) 75.0 planned 5 MMTPA facility at Gangavaram, Andhra Pradesh would lead to dilution of future earnings Avg Vol (Lakhs) 6.1 52 Week H/L 186/126 However current valuations still remain attractive (given the adverse macro backdrop for corporate earnings) and Dividend Yield (%) 1.7 our target price of Rs 175 provides a possible 25.7% upside from the current levels. Face Value (Rs) 10.0 Latest shareholding pattern (%) Key Takeaways Promoters 50.0 Indian Institutions 7.1 Petronet LNG’s revenues for Q4FY12 stood at Rs 6375.4 crore (growth of 0.7% qoq) below expectations on FII’s 14.3 the back of lower volumes (136 tbtus, -6.0% qoq) and improved realizations (+6.7%). The long term LNG for Public 28.6 the quarter was priced ~ $8.5 mmbtu while the spot cargoes price ranged between ~ $14-18 / mmbtu. The Total 100.0 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. Stock performance (%) 1m 3m 6m During the year, the company brought in a total of 226 cargoes including 171 long term cargoes and 34 spot Petronet -10.2 -8.2 -9.6 Nifty -1.0 1.9 2.4 cargoes and 21 cargoes for regasification services. The falling gas output from KG D6 (below 35 mmscmd), BSE – Oil -1.5 -4.1 -9.8 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 th Wednesday, 25 April, 2012 .
  2. 2. Quarterly Result Update 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. th Wednesday, 25 April, 2012
  3. 3. Quarterly Result UpdateDescription 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 71.3Other operational Income 52.7 45.4 15.9 52.7 72.6 -27.5 245.2 91.5 167.9Total Oper. Income(TOI) 6375.4 3986.0 60.0 6375.4 6330.3 0.7 22695.9 13197.3 72.0Raw 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 49.1Personnel 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 73.9Operating 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 24.2Interest 34.2 43.6 -21.5 34.2 34.5 -0.8 177.4 193.4 -8.3Exceptional Items 0.0 0.0 0.0 0.0 0.0 0.0 38.0 0.0 0.0Gross Profit 410.9 339.5 21.0 410.9 485.2 -15.3 1736.7 1091.1 59.2Depreciation 45.8 45.5 0.8 45.8 46.3 -1.0 184.2 184.7 -0.3PBT 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 0.0PBT 365.1 294.1 24.2 365.1 438.9 -16.8 1552.5 906.4 71.3Tax Rate 32.9 29.9 10.1 32.9 32.7 0.5 31.9 31.6 0.8Prov. 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 70.7CEPS (Rs.) 3.9 3.4 15.6 3.9 4.6 -14.9 16.6 10.7 54.4 th Wednesday, 25 April, 2012
  4. 4. Quarterly Result Update P/E Bands P/B Bands EV/EBITDA Bands350 300 35,000300 30,000 250250 25,000 200200 20,000150 150 15,000100 10050 10,000 50 5,000 0 Mar-04-50 Mar-06 Mar-08 Mar-10 Mar-12 0 0 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 CMP 7X 10X 13X 16X 19X CMP 1.5X 2.3X 3.1X 3.9X 4.7X EV 6X 8.5X 11X 13.5X 16X NIFTY Comparison BSE- Oil Index Comparison140.0 140130.0 130120.0 120110.0 110100.0 100 90.0 90 80.0 80 70.0 70 60.0 60 50.0 50 40.0 40 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 NIFTY PETRONET BSE-Oil PETRONET th Wednesday, 25 April, 2012
  5. 5. Quarterly Result Update Sales, EBIDTA & PAT Margin (%) Sales Volumes & Regasification Rs. Crore (%) 160 25 7000 12 140 20 6000 10 120 15 5000 8 100 4000 10 6 80 3000 5 4 60 2000 0 40 1000 2 20 -5 0 0 0 -10 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Sales Volumes Regasification (Tbtus) SALES EBITDA Margin (RHS) PAT Margin (RHS) Voume Growth RHS (%) th Wednesday, 25 April, 2012
  6. 6. Quarterly Result Update 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 th Wednesday, 25 April, 2012
  7. 7. Quarterly Result UpdateVentura Securities LimitedCorporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai – 400079This 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 noresponsibility (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 theirarticles. Neither Ventura Securities Limited nor any of the contributors accepts any liability arising out of the above information/articles. Reproduction in whole orin part without written permission is prohibited. This report is for private circulation. th Wednesday, 25 April, 2012

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