North zone-CFA Institute Research Challenge in India

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North zone-CFA Institute Research Challenge in India

  1. 1. Team Augustine of Hippo presentsPetronet LNG Ltd.
  2. 2. Company Overview Dahej Terminal Kochi Terminal Solid Cargo Port Direct MarketingOVERVIEW
  3. 3. Company OverviewDahej Terminal Installed Capacity Long term GSPA 16 12 2.5 in MMTPA 12 in MMTPA 2.5 8 2.5 8 5 4 7.5 4 5 0 0 RasGas Gazprom (MoU) Source: Company estimates, CMIE database Source: Company estimatesOVERVIEW
  4. 4. Company Overview  5 MMTPA installed capacity by Dec 2012.Kochi Terminal  20 year GSPA with Mobi Australia Company Ply Ltd: o 1.44 MMTPA LNG from its Gorgon project. o Expected date of start - Jan 2015.OVERVIEW
  5. 5. Company Overview  Solid Cargo Port with Adani Petronet (Dahej) Port Private Ltd.Solid Cargo Port  26% equity holdings  Import-export to the tune of 15 MMTPA capacity of dry bulk cargo/year (Coal, Steel and Fertilizers).OVERVIEW
  6. 6. Company Overview  Forayed into direct RLNG marketing.  LNG supply at consumer premises through trucks.  Planning to supply LNG to Coastal area consumers.Direct MarketingOVERVIEW
  7. 7. Company OverviewOur Rating: BUYCMP: INR 171.90Target Price: INR 241Upside: 40% OVERVIEW
  8. 8. LNG-Value ChainGas Production Liquefaction, Storage & Loading Shipping Re-gasification Transmission & Distribution OVERVIEW
  9. 9. Industry Overview & Competitive PositioningGap AnalysisThreat of SubstitutesThreat of CompetitorsOVERVIEW
  10. 10. Industry Overview & Competitive PositioningGap Analysis 600 Domestic Supply-Demand 500 in MMSCMD 400 300 335 Domestic Supply-Demand 200 100 98.4 114.8 142.7 178.1 32.9 600 0 2010-11 2011-12E 2012-13E 2013-14E 2014-15E 2019-20E Supply 146 155 191.6 198.4 202.9 215 500 Demand 178.9 253.4 306.4 341.1 381 550 Gap 32.9 98.4 114.8 142.7 178.1 335 in MMSCMD 400 Source: Mercados Analysis, DGH 300 335 200 178.1 114.8 142.7 Sectoral Demand 100 98.4 400 0 32.9 300 in MMSCMD 200 2010-11 2011-12E 2012-13E 2013-14E 2014-15E 2019-20E 100 0 Supply 146 155 191.6 198.4 202.9 215 2010-11 2011-12 2012-13 2013-14 2014-15 Sponge Iron 3.71 3.82 3.93 4.05 4.17 Demand 178.9 253.4 306.4 341.1 381 550 Refinery 24.44 25.42 26.43 27.49 28.59 City Gas 13.7 17.53 22.44 28.72 36.76 Gap 32.9 98.4 114.8 142.7 178.1 335 Fertilizer 49.39 57.48 68.08 68.08 68.08 Power 87.71 149.11 185.52 212.73 243.34Source: Mercados Analysis, DGH Source: Mercados analysis, student researchOVERVIEW
  11. 11. Industry Overview & Competitive PositioningGap Analysis 600 Domestic Supply-Demand 500 in MMSCMD 400 300 335 Sectoral Demand Domestic Supply-Demand 200 114.8 142.7 178.1 400 100 32.9 98.4 600 0 2010-11 2011-12E 2012-13E 2013-14E 2014-15E 2019-20E 300 500 Supply 146 Demand 178.9 155 253.4 191.6 306.4 198.4 341.1 202.9 381 215 550 in MMSCMD Gap 32.9 98.4 114.8 142.7 178.1 335 200 in MMSCMD 400 Source: Mercados Analysis, DGH 300 335 100 200 178.1 0 142.7 2013-14 Sectoral Demand 100 2011-12114.8 2010-11 98.4 2012-13 2014-15 400 Sponge 0 Iron 32.9 3.71 3.82 3.93 4.05 4.17 300 in MMSCMD 200 2010-11 2011-12E 2012-13E 2013-14E 2014-15E 2019-20E 100 Refinery 24.44 25.42 26.43 27.49 28.59 0 Supply 146 155 191.6 198.4 202.9 215 2010-11 2011-12 2012-13 2013-14 2014-15 City Gas 13.7 17.53 22.44 28.72 36.76 Sponge Iron 3.71 3.82 3.93 4.05 4.17 Demand 178.9 253.4 306.4 341.1 381 550 Refinery 24.44 25.42 26.43 27.49 28.59 Fertilizer 49.39 57.48 68.08 68.08 68.08 City Gas 13.7 17.53 22.44 28.72 36.76 Gap 32.9 98.4 114.8 142.7 178.1 335 Fertilizer 49.39 57.48 68.08 68.08 68.08 Power 87.71 149.11 185.52 212.73 243.34 Power 87.71 149.11 185.52 212.73 243.34Source: Mercados Analysis, DGH Source: Mercados analysis, student research Source: Mercados analysis, student researchOVERVIEW
  12. 12. Industry Overview & Competitive PositioningThreat of SubstitutesOVERVIEW
  13. 13. Industry Overview & Competitive Positioning Cost benefit analysis- Power Projects 5.89 7 Power cost (INR/unit) 6 4.51 4.25 4.05 3.91 3.85 5 3.65 3.39 3.7 3.25 3.19 2.92 4 3 2 1 Source: Student research 0 Cost of fuel Cost of fuel Cost of fuel Pithead Project 3.19 INR 3500/MT 3.39 INR 3800/MT 3.65 INR 4200/MT Within 1000Kms 4.05 INR 3500/MT 4.25 INR 3800/MT 4.51 INR 4200/MT Imported Coal 3.25 INR 4500/MT 3.7 INR 5600/MT 3.85 INR 5600/MT Gas based Project $ 7/mmbtu 2.92 3.91 $ 10/mmbtu 5.89 $ 16/mmbtuThreat of Substitutes Coal in Power Projects Naptha & Fuel oil in Fertilizer plant Shale Gas:  Most of the Shale gas reserve is expected to be across Gangetic plain, Assam, Rajasthan, and many coastal areas.  Indian Gov is likely to bring in bidding for Shale gas acreages by 2012.  Lack of exploration policies is one of the major hurdles in shale gas exploration.  Also, the production/exploration process is likely to pollute air and water.  Availability of conjunctive use of resources (land & water) is a complex socio-political issue. Petrol & Diesel Shale GasOVERVIEW
  14. 14. Industry Overview & Competitive PositioningThreat of SubstitutesOVERVIEW
  15. 15. Industry Overview & Competitive Positioning Cost benefit analysis- Power Projects Cost-benefit analysis - Fertilizer Plant Shale Gas: 5.89 7 615 608 700 Power cost (INR/unit) 6 525 4.51 512 600 4.25 4.05 3.91 Power & Feed cost 3.85 (INR/MT of Urea) 443 5  Most of the Shale gas reserve is expected to be across 3.65 410 3.39 3.7 3.25 500 3.19 2.92 4 320 400 3 200 300 2 140 Gangetic plain, Assam, Rajasthan, and many coastal areas. 200 1 Source: Student research 100 Source: Student research 0 Cost of fuel Cost of fuel Cost of fuel 0 Input Cost Input Cost Input Cost  Indian Gov is likely to bring in bidding for Shale gas acreages Pithead Project 3.19 INR 3500/MT 3.39 INR 3800/MT 3.65 INR 4200/MT Within 1000Kms 4.05 INR 3500/MT 4.25 INR 3800/MT 4.51 Natural gas 140 $ 7/MMBTU 200 $ 10/MMBTU 320 $ 16/MMBTU INR 4200/MT Imported Coal 3.25 INR 4500/MT 3.7 INR 5600/MT 3.85 Fuel Oil 410 512 $ 100/barrel 615 $ 120/barrel INR 5600/MT Gas based Project $ 7/mmbtu 2.92 3.91 $ 10/mmbtu 5.89 Naphtha 443 $ 800/MMBTU 525 $ 9500/MT 608 $ 1100/MT $ 16/mmbtu by 2012.Power ProjectsThreat of Substitutes Coal in Naptha & Fuel oil in Fertilizer plant  Lack of exploration policies is one of the major hurdles in Shale Gas:  Most of the Shale gas reserve is expected to be across shale gas exploration. Gangetic plain, Assam, Rajasthan, and many coastal areas.  Indian Gov is likely to bring in bidding for Shale gas acreages  Also, the production/exploration process is likely to pollute by 2012.  Lack of exploration policies is one of the major hurdles in shale gas exploration. air and water.  Also, the production/exploration process is likely to pollute air and water.  Availability of conjunctive use of resources (land & water) is  Availability of conjunctive use of resources (land & water) is a complex socio-political issue. a complex socio-political issue. Petrol & Diesel Shale GasOVERVIEW
  16. 16. Industry Overview & Competitive Positioning Upcoming LNG Projects 90 SAGE TAPI 80 in MMTPA Upcoming LNG Projects Jamnagar, RIL 70 Projects Owners FY12 FY15 FY16 FY18 FY20 Pipavav, BG group 60 West coat Dahej PLL 10 5 2.5in MMTPA 50 Ennore, IOCL Hazira Shell 3.5 1.5 40 Mudra, Adani Kochi PLL 5 2.5 30 East Coast, PLL Dabhol RGPPL 5 Dabhol, RGPPL 20 East Coast PLL 5 Kochi, PLL 10 Mudra Adani 5 Hazira, Shell 0 Dahej, PLL Ennore IOCL 5 FY12 FY15 FY16 FY18 FY20 Source: News sources West Coast 2.5 Pipavav BG group 5 Jamnagar RIL 5 TAPI 11Threat of Competitors SAGE 9 OVERVIEW
  17. 17. Why invest in Petronet LNGTimely Capacity AdditionContractual BenefitsUpcoming pipeline infra to increase market reachProposed Developments WHY INVEST IN PLL
  18. 18. Why invest in Petronet LNGTimely Capacity Addition South Dahej LNG Terminal India Demand-Statewise PLL - TimelyLNG Terminal Kochi capacity addition100 39080 Designed to meet northern and86western India  340 Poised to capture southern India’s demand. 78 demand. 290 60 48 49  Linked with GSPL’s network in Gujarat, the state 4840 Linked with GSPL’s network in Gujarat, the state 240 consumes about 33% of the natural gas in India. consumes about 33% of the natural gas in India. 19 190 20  140 Well connected with the HVJ & DUPL pipelines, 0 Well connected with the HVJ & DUPL pipelines, which provides direct access to western & which 11provides direct access FY toE western & FY FY 15 E 20 northern India. Kerala Karnataka northern India. Andhra Pradesh Tamil Nadu Capacity Source: Company estimates, student research Demand gap Supply Total Supply Source: Student research WHY INVEST IN PLL
  19. 19. Why invest in Petronet LNGTimely Capacity Addition South India Demand-Statewise Kochi LNG Terminal100 80 86  Poised to capture southern India’s demand. 78 60 48 49  Will be linked with Kochi-Mngalore-Dabhol 48 40 pipeline & Mangalore Chennai pipeline ensuring 19 smooth distribution. 20 0  Estimated demand of 5.1 MMTPA around kochi. FY 11 FY 15 E FY 20 E Kerala Karnataka Tamil Nadu Andhra Pradesh Total Supply Source: Student research WHY INVEST IN PLL
  20. 20. Why invest in Petronet LNG Long term supply linkage benefits:  Company is targeting to secure 70-75% of itsContractual Benefits installed capacity through long term GSPA.  Ensure reliable supply of natural gas at stable to lower rates as compared to spot rates.  Helps company in maintaining a healthy stable margin. WHY INVEST IN PLL
  21. 21. Why invest in Petronet LNG Take or Pay agreement benefits:  Management is in view of having 70-75% of theirContractual Benefits installed capacity consumption through these agreements.  Enables company to insulate its earning from the price-demand shocks.  The company has a GSPA on take or pay basis with GAIL, IOCL and BPCL for 7.5 MMTPA of R-LNG in the ratio of 60:30:10 respectively. WHY INVEST IN PLL
  22. 22. Why invest in Petronet LNG  GAIL has extensive plans for laying pipeline network: • Expand its pipeline network from 8000 Kms to in FY11 to 14000Kms by FY14 . • Transmission capacity to inc. from 150 mmscmd to 300 mmscmd during the sameUpcoming pipeline infra to increase market reach period.  Gujarat State Petronet Ltd. has also been authorized by petroleum and natural gas regulatory board to lay three new cross country pipelines by FY14. WHY INVEST IN PLL
  23. 23. Why invest in Petronet LNG  Direct distribution of LNG: East Coast LNG Terminal: • Exploring opportunities to supplycarry PLL Board has given approval to LNG to coastal area consumers out detailed feasibility study. through • small LNG vessels be India and by Plant is expected to in operational Sri Lanka FY2016. • Entered into retail marketing through Will cater to the growing demand of gas trucks to the region of the country. in East coast customer’s premises.Proposed Developments WHY INVEST IN PLL
  24. 24. Why invest in Petronet LNG   3x356 MWLNG Terminal: East Coast Gas-based Power Plant: • • Estimated cost – USD 870 million. carry PLL Board has given approval to • Transmission capacity study. from 150 out detailed feasibility to inc. • mmscmdexpected mmscmd during the Plant is to 300 to be operational by same period. FY2016. • • Firmcater to the growing demand of gas Will commitment awaited from Gujaratcoast region of controlled utility in East government the country. to finalize the investment.Proposed Developments WHY INVEST IN PLL
  25. 25. Why invest in Petronet LNG  East Coast LNG Terminal: • PLL Board has given approval to carry out detailed feasibility study. • Plant is expected to be operational by FY2016. • Will cater to the growing demand of gas in East coast region of the country.Proposed Developments WHY INVEST IN PLL
  26. 26. Why invest in Petronet LNG In INR Cr FY11 FY12E FY13E FY14E Fixed Asset ( Net Block) 2702 2468 6273 5878 Current Asset 1387 2382 3106 3917 Current Liability 1213 1486 1964 2441 Debt 3216 4720 6449 7845 Equity 2680 3399 4205 5439Ability to meet short term obligations Increasing ROE 2.50 12.00 40% 1.8 10.00 35% 1.6 2.00 30% 1.4 8.00 1.50 1.2 25% 6.00 1.0 1.00 20% 4.00 0.8 15% 0.6 0.50 2.00 10% 0.4 0.00 0.00 5% 0.2 FY9 FY10 FY11 FY12E FY13E FY14E Current Ratio 2.03 1.36 1.14 1.60 1.58 1.60 0% 0.0 FY9 FY10 FY11 FY12E FY13E FY14E Solvency Ratio 0.27 0.23 0.25 0.23 0.19 0.25 ROE 29% 19% 28% 34% 30% 37% Interest Cover 8.60 4.26 5.69 10.17 7.27 8.52 D/E 1.29 1.13 1.20 1.39 1.53 1.44 WHY INVEST IN PLL
  27. 27. Financial AnalysisIncome Statement FY11A FY 12E FY 13E FY 14E FY15E INR 13265 cr INR 20225 cr INR 23974 cr INR 36388 cr INR 42519 cr 34% revenue CAGR FY11 to FY15 Dahej LNG Terminal Kochi LNG Terminal 45000 14000 40000 12000 35000 10000 30000In INR crores in INR crores 25000 8000 20000 6000 15000 4000 10000 5000 2000 0 0 FY09A FY10A FY11A FY 12E FY 13E FY 14E FY15E FY16E FY 13E FY 14E FY15E FY16E SALES 8505 10747 13265 20225 21916 28048 34115 38917 Sales 2058 8339 8404 12540 EBITDA 978 944 1284 1674 1814 2321 2824 3221 EBITDA 170 690 696 1038 FINANCIAL ANALYSIS
  28. 28. Financial AnalysisIncome Statement: FY11A FY 12E FY 13E FY 14E FY15E 13265 20225 23974 36388 42519 Revenue CAGR of 34% FY11 to FY15 1284 1674 1984 3012 3519 EBITDA CAGR of 29% FY11 to FY15 17 22 26 40 47 EPS CAGR of 29% FY11 to FY15Cash Flow Statement: 997 522 1285 1743 2288 CFO CAGR of 23% FY11 to FY15 FINANCIAL ANALYSIS
  29. 29. Valuation - Discounted Cash FlowCash flow estimation by ‘Sum-of-part approach’: 2nd Jetty, COD – FY13 Expansion, COD FY16 Project, COD – FY13 Project, COD – FY17E Dahej Dahej Kochi East Coast LNG Terminal LNG Terminal LNG Terminal LNG Terminal VALUATION
  30. 30. Valuation - Discounted Cash FlowCash flow estimation by ‘Sum-of-part approach’: Dahej Annual capital expenses has been distributed based on the 2nd Jetty, COD – FY13 LNG Terminal estimates of past project of PLL.Expansion, COD FY16 Dahej Annual capital expenses in terms of percentage has been assumed LNG Terminal to be same as Dahej P-II as both are 5 MMTPA brown field project. Project, COD – FY13 Kochi Annual capital expenses has been distributed based on the LNG Terminal estimates of past project of PLL.Project, COD – FY17E East Coast Annual capital expenses in terms of percentage has been assumed LNG Terminal to be same as Kochi as both are 5 MMTPA green field project. VALUATION
  31. 31. LNG PricingFor Dahej Terminal: • The FOB value of LNG was fixed at $2.53 per mmbtu during the period CY04-08. • From Jan 2009 onwards this is being gradually linked to JCC. • The upward adjustment will continue till Jan 2014, when LNG prices shall reflect a linkage of 12.5% with JCC.For Kochi Terminal: • In line with the GSPA with ExonMobil, FOB value of LNG is expected to be at 14.5% of JCC.JCC forecasting: • Correlation coefficient of 0.93 has been observed between Nymex crude oil price & JCC. • JCC has been regressed against Nymex crude’s future price for the last 44 months. • Price forecasting for JCC has been carried out with the regression equation obtained. VALUATION
  32. 32. Valuation - Discounted Cash FlowGas Sourcing: As per management’s target Long term GSPA 75% In case of Dahej, 10% from spot and 15% from Short term GSPA +Spot 25% medium to short term GSPARLNG contribution margin 12.1% As % of revenue, Average of last 3 yearsOther costs 2.51% As % of revenue, Average of last 5 yearsWorking capital 3.26% As % of revenue, Average of last 5 yearsDepreciation 5.08% As % of opening gross block, Avg of 5 years VALUATION
  33. 33. Valuation - Discounted Cash FlowWACC: FY 12 to FY 20 11.60% RFR=8.3%, Beta = 0.82, Debt : Equity=42.9% Terminal 10.06% RFR=6.0%, Beta = 0.95, Debt : Equity=25%Terminal Parameters Terminal Growth rate 3% In long term country’s real GDP is expected to Return on Capital 15% grow at 2% with 2% inflation & hence, company Reinvestment rate 20% is expected to grow at a nominal rate of 3%. VALUATION
  34. 34. Valuation - Discounted Cash FlowTarget Price: In INR crores PV(Project’s cash flow) 21270 Project’s cash flow discounted at WACC + PV(Equity inv. in port) 162 Equity income from port discounted at cost of + equity PV(Other investment) 28 Cash inflow from investment in bonds/debt - Current value of Debt 3352 Book value of debt as in balance sheet = Equity value 18108 Value of company in hands of equity holders VALUATION
  35. 35. ValuationFY12 year end target price:Including East Coast Project: INR 241Excluding East Coast Project: INR 213 VALUATION
  36. 36. Risk Analysis Possible Stronger Competition, GDP growth rate, Shale Gas TAPI & SAGE Limited no. of supplier UnlikelyLikelihood Political instability Market Risk Earthquake, Tsunami Plant Machinery Failure, Rare Sudden surge in global Weather Domestic Pipeline failure demand of LNG Minor Intermediate Major Impact RISK ANALYSIS
  37. 37. Risk AnalysisMonte Carlo Simulation:On stock’s price for the given upside & downsiderisks associated with key forecasts: Capacity utilization: varied from 90% to 100%. JCC Index: varied from $ 80 to $ 110 per mmbtu.In all possible circumstances, stock’s price moveswith: Mean: INR 225.96 Standard deviation: INR 10.84 RISK ANALYSIS
  38. 38. Thank You
  39. 39. Data & Charts Company Competition Risks DCF Model Fin. Statements FY 11 results Upcoming competitors Montecarlo Simulation Sensitivity Analysis Balance Sheet Coal as a substitute in Free cash Flow to the Q2 FY 12 Results Income Statement power sector Firm Naphtha & Fuel Oil as a In the stock market LNG Pricing Annual Capex substitute in Fertilizer Petrol & Diesel as a Shareholding Pattern Annual Revenue substitute in CGD Equity StructureDisclosure: Sources for all data & charts are: Capitaline database, CMIE databse, News sources, Student research DATA & CHARTS
  40. 40. FY 11 results(in INR crores) 11-Mar 12-Mar (in INR crores) 11-MarSOURCES OF FUNDS : INCOME : Share Capital 750 750 Sales Turnover 13,197.29 Reserves Total 1,930.16 1,484.88 Excise Duty 0 Total Shareholders Funds 2,680.16 2,234.88 Net Sales 13,197.29 Secured Loans 3,035.57 2,299.77 Other Income 67.95 Unsecured Loans 180.56 200.04 Stock Adjustments 0 Total Debt 3,216.13 2,499.81 Total Liabilities 5,896.29 4,734.69 Total Income 13,265.24APPLICATION OF FUNDS : EXPENDITURE : Gross Block 3,553.73 3,549.51 Raw Materials 11,801.20 Less : Accumulated Depreciation 851.29 666.65 Power & Fuel Cost 65.09 Net Block 2,702.44 2,882.86 Employee Cost 28.5 Capital Work in Progress 2,202.87 1,318.36 Other Manufacturing Expenses 14.94 Investments 1,164.88 538.62 Selling and Administration Expenses 43.73 Current Assets, Loans & Advances Miscellaneous Expenses 27.51 Inventories 247.98 222.26 Less: Pre-operative Expenses Capitalised 0 Sundry Debtors 847.17 503.48 Total Expenditure 11,980.97 Cash and Bank 154.02 340.5 Operating Profit 1,284.27 Loans and Advances 138.29 155.36 Interest 193.17 Total Current Assets 1,387.46 1,221.60 Gross Profit 1,091.10 Less : Current Liabilities and Provisions Depreciation 184.68 Current Liabilities 1,034.81 744.87 Provisions 178.55 155.68 Profit Before Tax 906.42 Total Current Liabilities 1,213.36 900.55 Tax 265 Net Current Assets 174.1 321.05 Fringe Benefit tax 0 Deferred Tax Assets 1.4 0.9 Deferred Tax 21.8 Deferred Tax Liability 349.4 327.1 Reported Net Profit 619.62 Net Deferred Tax -348 -326.2 Total Assets 5,896.29 4,734.69 DATA & CHARTS
  41. 41. Q2 FY 12 Results(in INR crores) 11-Sep 10-SepGross Sales 5,366.87 3,057.72Excise Duty 0 0Net Sales 5,366.87 3,057.72Other Operating Income 0 0Other Income 20.11 18.59Total Income 5,386.98 3,076.31Total Expenditure 4,918.52 2,786.10PBIDT 468.46 290.21Interest 45.83 49.48PBDT 422.63 240.73Depreciation 46.3 46.61Tax 115 55Deferred Tax 1 8Reported Profit After Tax 260.33 131.12 DATA & CHARTS
  42. 42. In the stock market (in INR Crs)Latest Data as on 04-Nov-2011 Latest Equity (Rs in Crs) 750 Latest Reserve (Rs in Crs) 1,930.16 Latest Book Value(Unit Curr.) 35.74 Latest EPS(Unit Curr.) 11.92 Latest Market Price(Unit Curr.) as 170.45 on 4/Nov/2011 Latest P/E Ratio 14.3 52 Week High(Unit Curr.) 185.85 52 Week Low(Unit Curr.) 105.1 Market Capitalisation (Rs in Crs) 12,783.75 Stock Exchange BSE Dividend Yield % 1.17 DATA & CHARTS
  43. 43. Shareholding PatternOwnership Pattern as on 30-09-2011 % Share Holding Fund No of SharesForeign (Promoter & Group) 0 DSP BlackRock Mutual Fund 304972Indian (Promoter & Group) 50 Goldman Sachs Mutual Fund 10247Total of Promoter 50 IDFC Mutual Fund 254606Non Promoter (Institution) 22.6554 Kotak Mahindra Mutual Fund 204571Non Promoter (Non-Institution) 27.3447 L&T Mutual Fund 163490Total Non Promoter 50.0001 LIC NOMURA Mutual Fund 89800Total Promoter & Non Promoter 100.0001 Sundaram Mutual Fund 13479231 DATA & CHARTS
  44. 44. Equity Structure BPCL 12% Entities Holdings BPCL 12.50% PUBLIC 35% GAIL GAIL 12.50% 12% IOC 12.50% ONGC 12.50% GDF SUEZ 10.00% ADB 5.20% IOC PUBLIC 34.80% 13% ADB 5% GDF SUEZ ONGC 10% 13% DATA & CHARTS
  45. 45. Upcoming competitorsin MMTPA Upcoming LNG Projects Projects Owners FY12 FY15 FY16 FY18 FY20 Dahej PLL 10 5 2.5 Hazira Shell 3.5 1.5 Kochi PLL 5 2.5 Dabhol RGPPL 5 East Coast PLL 5 Mudra Adani 5 Ennore IOCL 5 West Coast 2.5 Pipavav BG group 5 Jamnagar RIL 5 TAPI 11 SAGE 9 DATA & CHARTS
  46. 46. LNG PricingY = 22.695 + 0.719*X 44 monthly data point from jan-08 to Aug-2011Rs/mmtpa(cr) JCCindex Spot mkt Dahej Kochi Long term SPA Short term SPA Long term SPA FY 12 95.3 3283.2 1839.6 2830.3 3283.2 FY 13 85.2 2937.1 2100.5 2532.0 2937.1 FY 14 86.4 2975.7 2452.5 2565.3 2975.7 FY 15 87.0 2998.7 2574.7 2585.1 2998.7 FY 16 87.7 2983.2 2571.7 2571.7 2983.2 FY 17 88.3 2996.2 2608.1 2582.9 2996.2 FY 18 89.2 3009.3 2645.0 2594.2 3009.3 FY 19 90.2 3022.4 2682.4 2605.5 3022.4 FY 20 91.3 3035.6 2720.3 2616.9 3035.6 DATA & CHARTS
  47. 47. Montecarlo Simulation ValuesMean 225.96St. Dev. 10.84Mean St. Error 0.15Median 226.2Minimum 204.28First Quartile 220.4Third Quartile 231.83Maximum 247.44 DATA & CHARTS
  48. 48. Coal as a substitute in power sectorCost per unit electricity produced units Domestic Project Imported coal Project Cost per unit of electricity produced from new gas based Power Plantfrom new coal based power plant Variable Cost:Variable Cost: Coal-Pithead Coal-Within 1000 Km Imported coal Fuel Price Fuel Price LNG FOB $/MMBTU 10 Landed price of coal INR/M T 4200 4200 6000 Transportation charges $/MMBTU 0 Transportation charges INR/M T 0 1295 1295 Price of natural gas $/MMBTU 10 Total cost INR/M T 4200 5495 7295 Price of coal INR/Kg 4.2 5.495 7.295 Fuel required Coal required Station heat rate 2500 2500 2450 Station heat rate Kcal/Kwh 1900 GCV of coal Kcal/Kwh Kcal/Kg 4200 4200 6665 GCV of coal Kcal/Kg 14200 Aux consumtion % of output 9.50% 9.50% 9.50% Aux consumtion % of output 3% Net coal required Kg 0.66 0.66 0.41 Natural gas required Kg 0.14 Variable cost per unit(KWHr) 2.76 3.61 2.96 Variable cost per unit(KWHr) 3.30Fixed Cost: Cost for 1 MW installation Cpaex INR mn 50 50 50 Fixed Cost: Debt INR mn 35 35 35 Cost for 1 MW installation Equity INR mn 15 15 15 Cpaex INR mn 40 Apportioned cost Depreciation INR mn 1.8 1.8 1.8 Debt INR mn 28 Interest O&M INR mn 3.5 0.95 3.5 0.95 3.5 0.95 Equity INR mn 12 Plant load factor INR mn 0.8 0.8 0.8 Apportioned cost Fixed cost per unit(KWHr) 0.89 0.89 0.89 Depreciation INR mn 1.4Total Cost 3.65 4.5 3.85 Interest INR mn 2.8 O&M INR mn 0.60 Plant load factor 90%Scenario Analysis Domestic Project Imported Fixed cost per unit(KWHr) 0.61at different Coal Prices Pithead Within 1000 Km coal ProjectLanded price of coal (INR/MT) 3500 3500 4500 Total cost per unit (INR/KWHr) 3.91Total cost per unit (INR/KWHr) 3.66 4.05 3.25Landed price of coal (INR/MT) 3804 3804 5612 Electricity cost per unit at differerent LNG FOB PricesTotal cost per unit (INR/KWHr) 3.9 4.25 3.7 LNG FOB ($/mmbtu) 7 10 16Landed price of coal (INR/MT) 4200 4200 6000 Total cost per unit (INR/KWHr) 2.92 3.91 5.89Total cost per unit (INR/KWHr) 4.22 4.51 3.85 DATA & CHARTS
  49. 49. Naphtha & Fuel Oil as a substitute in FertilizerFeed and Power cost per MT of Ureas using different fuels Natural Gas Fuel Oil NaphthaFuel Price $/barrel 120 $/MMBTU 16 $/Mt 857.76 1100Specific Energy Consumption(Urea) GJ/Mt 20.9 31.3 24.3Gross calorific Value(fuel) Kcal/000 cm 10000 Kcal/Kg 10440 10500 Gj/Mmbtu 1.046 Gj/Mt 43.68 43.93Feed & Power cost ($/mt of Urea) 319.69 614.63 608.44 Feed & Power cost at different RLNG prices RLNG Price($/mmbtu) 7 10 15 18 Feed & Power Cost($/mt of Urea) 139.87 199.81 299.71 359.66 DATA & CHARTS
  50. 50. Petrol & Diesel as a substitute in CGD Average Mileage(Km/L or Km/Kg)Cost Benefit Analysis for CGD Prices in Delhi Diesel Petrol CNGBus 4 4.4 Petrol (INR/Litre) 67Car 14 18 25 Diesel (INR/litre) 41Auto 35 40 LNG (INR/Litre) 32 Average Cost(Rs/Km)Bus 10.25 7.27Car 2.93 3.72 1.28Auto 1.91 0.8 Max Saving(INR/km) Savings/Km (%) 2.98 0.2905 2.44 0.6561 1.11 0.5821 DATA & CHARTS
  51. 51. Balance Sheet (in INR crores) FY 11A FY 12E FY 13E FY 14ESOURCES OF FUNDS : Share Capital 750 750 750 750 Addition to Reserve 445 719 806 1234 Reserves Total 1930 2649 3455 4689 Total Shareholders Funds 2680 3399 4205 5439 Secured Loans 3036 4720 6449 7845 Unsecured Loans 181 0 0 0 Total Debt 3216 4720 6449 7845 Total Liabilities 5896 8119 10655 13284APPLICATION OF FUNDS : Gross Block 3554 3554 7754 7754 Less : Accumulated Depreciation 851 1085 1480 1875 Net Block 2702 2468 6273 5878 Capital Work in Progress 2203 2862 2984 3388 Investments 1165 2425 807 3117 Current Assets, Loans & Advances Inventories 248 441 574 725 Sundry Debtors 847 861 1135 1416 Cash and Bank 154 814 1048 1342 Loans and Advances 138 267 349 435 Total Current Assets 1387 2382 3106 3917 Current Liabilities 1035 1190 1577 1954 Provisions 179 296 386 486 Total Current Liabilities 1213 1486 1964 2441 Net Current Assets 174 896 1143 1476 Deferred Tax Assets 1 0 0 0 PBT 906 1346 1509 2310 Deferred Tax Liability 349 635 711 697 Net Deferred Tax -348 -635 -711 -697 Total Assets 5896 8017 10496 13163 DATA & CHARTS
  52. 52. Income Statement (all financials are in INR crores) FY 12E FY 13E FY 14E FY 15ERevenue 20225 23974 36388 42519Expenses Raw material: FOB gas 18043 21387 32461 37931 Power & fuel costs 129 153 233 272 Employee costs 47 56 85 99 Other manuf costs 28 33 50 59 S&Admin exp 250 296 449 525 Misc 55 65 98 115EBITDA 1674 1984 3012 3519Depreciation 181 234 394 394EBIT 1493 1750 2617 3125Interest 147 241 307 381EBT 1346 1509 2310 2744Tax 444 498 762 906PAT 902 1011 1548 1838 DATA & CHARTS
  53. 53. Sensitivity Analysis Terminal value 1% 2% 3% 4% 5% WACC (FY12-FY20) 10.10% 252.98 264.48 278.86 297.53 323.04 10.60% 241.00 252.04 265.85 283.77 308.26 11.10% 229.53 240.14 253.39 270.60 294.12 11.60% 218.55 228.74 241.47 258.00 280.58 12.10% 208.04 217.82 230.05 245.93 267.62 12.60% 197.96 207.36 219.11 234.37 255.21 13.10% 188.31 197.35 208.63 223.29 243.32 DATA & CHARTS
  54. 54. Annual Capex FY 06A FY 07A FY 08A FY 09A FY 10A FY 11A FY 12E FY 13E FY 14E FY 15E FY 16E FY 17E As % of project cost 8.1% 26.7% 42.2% 23.1% Mobilisation advance 107 76 20 0 I eI EPC 0 377 964 1219 as Ph Int & fin 0 6 32 100DAHEJ Net capex 107 352 556 304 As % of project cost 5.3% 60.0% 34.7% tty Expense 53 600 347 Je n As % of project cost 8.1% 26.7% 42.2% 23.1% sio an Expense 243 800 1265 692 p Ex As % of project cost 0.24% 0.23% 0.62% 11.47% 17.60% 19.63% 30% 20.2% Mobilisation advance 10 76 195 94KOCHI II & Surveys/EPC 10 20 36 449 1037 1877 eI as Int & fin 0 2 34 120 Ph Total 10 20 46 527 1266 2091 1260 849EAST COAST As % of project cost 1.09% 11.47% 17.60% 19.63% 30.00% 20.22% Mobilisation advance st oa Surveys/EPC c st Int & fin Ea Total 45 475 729 813 1242 837Annual CAPEX 117 372 602 832 1266 2144 2148 2471 1993 1504 1242 837 DATA & CHARTS
  55. 55. Annual Revenue FY 12E FY 13E FY 14E FY 15E FY 16E FY 17E FY 18E FY 19E FY 20E Installed Capacity mmtpa 10 10 12.5 15 15 15 15 15 15 Capacity Utilisation 100% 100% 90% 88% 100% 100% 100% 100% 100% Cost: Gas sourcing Long term GSPA mmtpa 7.5 7.5 8.4375 9.84375 11.25 11.25 11.25 11.25 11.25 DAHEJ Short term GSPA mmtpa 1.5 1.5 1.6875 1.96875 2.25 2.25 2.25 2.25 2.25 Spot mkt mmtpa 1 1 1.125 1.3125 1.5 1.5 1.5 1.5 1.5 Gas Price Long term GSPA Rs./mmtpa 1840 2100 2453 2575 2572 2608 2645 2682 2720 Short term GSPA Rs./mmtpa 2830 2532 2565 2585 2572 2583 2594 2606 2617 Spot mkt Rs./mmtpa 3283 2937 2976 2999 2983 2996 3009 3022 3036 Gas FOB 18043 19552 25022 30434 34718 35152 35593 36039 36492 Total 20225 21916 28048 34115 38917 39404 39898 40398 40905 Installed Capacity mmtpa 5 5 5 5 5 5 5 5 Capacity Utilisation 13% 50% 50% 75% 100% 100% 100% 100% Cost: Gas sourcing Long term GSPA mmtpa 0.46875 1.875 1.875 2.8125 3.75 3.75 3.75 3.75 KOCHI Short term, spot mmtpa 0.15625 0.625 0.625 0.9375 1.25 1.25 1.25 1.25 Gas Price Long term GSPA Rs./mmtpa 2937 2976 2999 2983 2996 3009 3022 3036 Short term, spot Rs./mmtpa 2937 2976 2999 2983 2996 3009 3022 3036 Gas FOB 1836 7439 7497 11187 14981 15046 15112 15178 Total 2058 8339 8404 12540 16793 16866 16940 17014 Installed Capacity mmtpa 5 5 5 5 Capacity Utilisation 50% 100% 100% 100% Cost: Gas sourcing EAST COAST Long term GSPA mmtpa 1.875 3.75 3.75 3.75 Short term, spot mmtpa 0.625 1.25 1.25 1.25 Gas Price Long term GSPA Rs./mmtpa 2996 3009 3022 3036 Short term, spot Rs./mmtpa 2996 3009 3022 3036 Gas FOB 7490 15046 15112 15178 Total 8396 16866 16940 17014Annual Revenue 23974 36388 42519 51457 64594 73630 74278 74933 DATA & CHARTS
  56. 56. Free cash Flow to the Firm FY 12E FY 13E FY 14E FY 15E FY 16E FY 17E FY 18E FY 19E FY 20E Sales mmtpa 20225 21916 28048 34115 38917 39404 39898 40398 40905 Expenses 18551 20103 25727 31292 35696 36143 36596 37055 37520 EBIDTA 1674 1814 2321 2824 3221 3261 3302 3344 3385 Depreciation mmtpa 181 181 181 181 333 333 333 333 333 EBIT mmtpa 1493 1633 2141 2643 2888 2928 2969 3010 3052 DAHEJ EBIT(1-t) mmtpa 1000 1094 1434 1771 1935 1962 1989 2017 2045 Depreciation 181 181 181 181 333 333 333 333 333 Working capital Rs./mmtpa 659 714 914 1112 1268 1284 1300 1316 1333 WC Inv Rs./mmtpa 659 55 200 198 156 16 16 16 17 Capex Rs./mmtpa 843 1147 1265 692 0 0 0 0 0 FCFF -321 73 150 1062 2112 2279 2306 2334 2362 Sales mmtpa 2058 8339 8404 12540 16793 16866 16940 17014 Expenses 1887 7649 7708 11502 15403 15470 15538 15606 EBITDA 170 690 696 1038 1390 1396 1402 1408 Depreciation mmtpa 53 214 214 214 214 214 214 214 EBIT mmtpa 117 477 482 824 1176 1182 1188 1195 KOCHI EBIT(1-t) 78 319 323 552 788 792 796 800 Depreciation Rs./mmtpa 53 214 214 214 214 214 214 214 Working capital Rs./mmtpa 67 272 274 409 547 550 552 554 WC Inv 67 205 2 135 139 2 2 2 Capex 1260 849 0 0 0 0 0 0 0 FCFF -1260 -785 328 534 631 863 1003 1007 1012 Sales 8396 16866 16940 17014 Expenses 7702 15470 15538 15606 EAST COAST EBITDA mmtpa 695 1396 1402 1408 Depreciation mmtpa 211 211 211 211 EBIT 484 1185 1191 1198 EBIT(1-t) Rs./mmtpa 325 794 798 802 Depreciation Rs./mmtpa 211 211 211 211 Working capital 274 550 552 554 WCInv 274 276 2 2 Capex 837 0 0 0 FCFF 45 475 729 813 1242 -576 729 1006 1011FCFF -1536 -237 1207 2409 3985 2567 4038 4348 4384 DATA & CHARTS

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