PETRONET LNG’s stock price took no heed of the company’s poorer-than-expected fourth quarter show. The company reported a 52% fall in its net profit to Rs 97.3 crore against analyst expectation of profit around Rs 140 - 150 crore. The scrip that retraced 4.5% in three trading sessions post-results regained lost ground on Friday to close at the pre-results level.
Petronet reported an 11% increase in sales volume to 91.2 trillion British thermal units (tBtu) following its Dahej Terminal’s expansion project that doubled its capacity to 10 million tonnes per annum (mtpa).
At the same time, the LNG supply from Qatar went up to 7.5 mtpa from the earlier 5 mtpa. The company also took delivery of a new LNG ship “Aseem” to transport this additional 2.5 mtpa from Qatar, which delivered its first cargo in January ‘10.
The sales volumes were, however, the lowest in all the four quarters of FY10. Increasing availability of cheaper KG basin gas and limited pipeline capacity to transport gas towards North India cut short the demand for spot LNG cargos during the quarter. Gail’s project to augment capacity on its Dahej-Vijaypur route is expected to be completed not before October ‘10. While volumes remained short of the enhanced capacity, the capacity addition added Rs 20.3 crore to depreciation and Rs 26.1 crore to the interest burden during the quarter.
Considering the quarterly profit figures, the company’s earnings per share (EPS) stands at Rs 5.4 for the year ended March ‘10. The current market price is 15.1 times the whole year’s EPS. The dividend yield is around 2.1%. Overall, the valuations appear reasonable but hold little scope for improvement in the near term unless the company is able to scale up capacity utilisation substantially. Commissioning of Gail’s new Dahej-Vijaypur pipeline could prove to be a key trigger.
Petronet reported an 11% increase in sales volume to 91.2 trillion British thermal units (tBtu) following its Dahej Terminal’s expansion project that doubled its capacity to 10 million tonnes per annum (mtpa).
At the same time, the LNG supply from Qatar went up to 7.5 mtpa from the earlier 5 mtpa. The company also took delivery of a new LNG ship “Aseem” to transport this additional 2.5 mtpa from Qatar, which delivered its first cargo in January ‘10.
The sales volumes were, however, the lowest in all the four quarters of FY10. Increasing availability of cheaper KG basin gas and limited pipeline capacity to transport gas towards North India cut short the demand for spot LNG cargos during the quarter. Gail’s project to augment capacity on its Dahej-Vijaypur route is expected to be completed not before October ‘10. While volumes remained short of the enhanced capacity, the capacity addition added Rs 20.3 crore to depreciation and Rs 26.1 crore to the interest burden during the quarter.
Considering the quarterly profit figures, the company’s earnings per share (EPS) stands at Rs 5.4 for the year ended March ‘10. The current market price is 15.1 times the whole year’s EPS. The dividend yield is around 2.1%. Overall, the valuations appear reasonable but hold little scope for improvement in the near term unless the company is able to scale up capacity utilisation substantially. Commissioning of Gail’s new Dahej-Vijaypur pipeline could prove to be a key trigger.
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