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Petronet LNG (PLNG) - Qtr. Update - Dated - October 28, 2013




Axis Capital Limited


20 Oct 2013





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Petronet LNG (PLNG) reported weak Q2FY14 PAT of Rs 1.8 bn (lower than our/ Street estimate of Rs 1.9/2.1 bn) due to lower utilization at Dahej terminal, and higher depreciation, interest costs post capitalization of Kochi terminal. Earnings outlook remains sluggish due to (a) weak industrial demand due to high LNG prices, and (b) low utilization of Kochi terminal due to lack of pipeline connectivity. Put PLNG Under Review: Given weak outlook on overall LNG demand and low utilization of Kochi terminal, we expect our estimates to come down and would review them shortly. Despite muted earnings outlook in near term, valuation would be supported by possible gas pooling, which would boost LNG demand. Kochi terminal: Issues aplenty, best case utilization to remain low at 30% Management indicated utilization of Kochi terminal would remain weak over the next 1-2 years as commissioning of GAIL’s Kochi-Kanjirkhod-Bangalore-Mangalore (KKBM) pipeline has been delayed by at least a year due to land acquisition issues in Tamil Nadu and Mangalore. Anchor customers mostly along the KKBM pipeline, represent total demand of 1.53 mnte, implying utilization at ~30% once the pipeline is commissioned. Regards, Amit Mishra, CFA (Sr VP – Energy) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1142 Prashant Tarwadi (VP – Energy) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1113

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