Petronet LNG stock ignites after Q1FY21 earnings beat estimates1 min read . Updated: 18 Aug 2020, 10:34 AM IST
- Dahej terminal is operating at almost full capacity whereas Kochi terminal operates at 19% of its nameplate capacity. As such, Petronet’s investors have little to complain about
Shares of Petronet LNG Ltd rose about 4% in early deals on NSE on Tuesday following the company’s June quarter results.
The liquefied natural gas (LNG) importer’s standalone Q1 net profit came in at ₹520 crore, above ₹487.90 crore that a Bloomberg poll of analysts had estimated. Petronet’s June quarter net profit fell 7% year-on-year at a time when revenues have decreased at a much sharper rate of 43%.
According to analysts, higher-than-expected volumes and margins drive the earnings beat for the June quarter.
Petronet’s flagship Dahej terminal processed 181 tBtu (trillion British thermal units) of LNG compared to 206 tBtu of LNG processed during the March quarter. According to analysts at Motilal Oswal Financial Services Ltd, “Utilization at Dahej was better than expectations at 82% (versus estimated 75%, 114% in 1QFY20 and 93% in 4QFY20). As it turns out, the impact of the covid-19 lockdown was lower than estimated for the company.
On the other hand, utilisation at Petronet’s Kochi terminal disappointed. Motilal Oswal added, “Utilization at Kochi was lower than expectations at 14% (versus estimated 20%, 14% in 1QFY20 and 21% in 4QFY20)."
Even so, Petronet did well on the profitability front. True, absolute earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 11% year-on-year. However, margins have improved. Probal Sen, senior vice-president at Centrum Broking Ltd said, blended Ebitda margins of ₹47.9 per million British thermal unit (mmBtu) is 6% higher year-on-year and at 13 quarter high and well above Centrum’s estimates of ₹40.8/mmbtu." Sen pointed out, margins improved owing to higher than expected volumes, lower raw material cost and lower other operating expenses.
Meanwhile, in a recent update, Petronet has informed that since June, its Dahej terminal is operating at almost full capacity whereas Kochi terminal operates at 19% of its nameplate capacity. As such, Petronet’s investors have little to complain about. After all, the stock is just about 8% away from its pre-covid highs seen in January.