Volume growth drives earnings. PLNG reported PAT of `2,063m (up 18% qoq), 20% higher than consensus and our estimates, mainly owing to higher spot purchases and higher other income (interest on tax refund of `110m). Volumes were up 5% qoq vs. our expectation of flattish growth on PLNG importing more spot cargoes to benefit from the low KG D6 gas production. As expected, regascharges rose 5% over CY10, at `32.7/mmbtu.
n Growth in volume and earnings to continue. We expect FY12e volume to be 9.6mtpa (8.5mtpa in FY11), as management plansto import ~15 spot cargoes during FY12 on the back of the recently signed 1.5mtpa short-term contract for FY12-13. We maintain ourearnings estimates and expect 17% earnings CAGR over FY11-16e due to rise in volumes and higher regas charges.
n Valuation and risks. We raise our target price to `153 from `140 as we roll forward our valuation to Mar '12e. We reiterate Buy as we expect LNG demand to remain robust amid a favorable demand-supply scenario. Signing of a long-term contract and expected easing of pipeline capacity constraints are potential stock triggers. Risks: Lower regas charges and volumes.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
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