It’s well known that a major beneficiary of the domestic shortage of natural gas supplies is Petronet LNG Ltd. The scenario is likely to remain the same till there is an improvement in supply.
The company has delivered a strong financial performance in the last two quarters. For the September quarter, net profit almost doubled on a year-on-year (y-o-y) basis to Rs 260 crore, a bit higher than the June quarter. Petronet attributes the better performance to additional volumes with improved margins and higher operational efficiency.
Petronet LNG Dahej terminal. File photo.
Petronet’s current nameplate capacity is about 10 million tonnes per annum and the company operated at 106% capacity utilization in the September quarter. On the volume front, it did well and the total regasified volume increased by 35% y-o-y to 135.08 trillion British thermal units. That boosted revenue, which grew 75% y-o-y. Volumes were higher on a sequential basis as well.
However, y-o-y growth in revenue and net profit was lower compared with that in the June quarter; revenue had grown by 83% and net profit growth was as high as 130% in that quarter.
The Petronet LNG stock has outperformed the BSE-200 index since the beginning of this fiscal, factoring in most of the positives at the current levels. However, near-term upsides could be limited.
While LNG (liquefied natural gas) demand is strong, one of the key worries for the company in the near future is the capacity constraint. Petronet’s Kochi terminal is expected to be commissioned towards the end of calendar year 2012. That means growth could moderate in the near term.
Analysts expect the company to report similar performance for the next couple of quarters. Another concern is of rising spot LNG prices and its possible adverse impact on demand.