Shares of Petronet LNG Ltd are simply 6% away from its highs in January on NSE. Petronet imports and regasifies LNG (liquefied pure gasoline).
In preserving with the efficiency of different corporations, Petronet too felt covid-19 lockdown’s antagonistic affect for the March quarter. Reported earnings earlier than curiosity, tax, depreciation and amortisation (Ebitda) at nearly Rs698 crore was under many analysts’ estimates. Apart from decrease volumes, the corporate’s profitability was harm owing to a foreign exchange lack of ₹180 crore and a one-time contribution of ₹100 crore to the PM cares fund.
The firm’s flagship Dahej terminal processed 206 tBtu (trillion British thermal items) of LNG, representing a 7% decline from the December quarter. In different phrases, the Dahej terminal utilisation stood at about 93% within the March quarter in comparison with about 100% within the December quarter. Although for the yr as the entire, the image doesn’t look dangerous. Petronet stated, the Dahej terminal operated at round 103% of its identify plate capability in FY20, processing 885 tBtu of LNG, which is the best ever in a yr.
Given that the lockdown continued for an excellent a part of the June quarter, it will weigh on volumes. The excellent news is that Dahej utilisation ranges at the moment are at 100% in June from about 55-60% in April-May.
On the opposite hand, the utilisation of the Kochi terminal is anticipated to enhance to 30-35% submit the commissioning of the Kochi-Mangaluru pipeline by the tip of this month.
Analysts from Credit Suisse Securities (India) Pvt. Ltd stated in a report on 30 June, “Risk of decrease regasification tariff at Kochi exists.” The broking firm added, “Petronet has already cut the regasification tariff at Kochi terminal to Rs79.14 but the offtakers are demanding a lower tariff.”
Meanwhile, it’s encouraging that Petronet has elevated the dividend to Rs12.5 per share in FY20 (dividend payout at about 70%) from Rs10 per share in FY19.
Going ahead, benign LNG costs are anticipated to enhance demand prospects for Petronet.
But near-term upsides for the inventory may effectively be restricted. Antique Stock Broking Ltd maintains its ‘hold’ score on the inventory. “We count on FY21 to be difficult by way of throughput, on account of decrease utilization stemming from lockdown,” wrote Nitin Tiwari on Antique in a report on 1 July. “In addition the competitive intensity in the LNG import segment is rising with construction and commissioning of newer capacities and that could make the business environment challenging for Petronet,” added Tiwari.