StockWatch Series: by Kalidas (Anil Selarka) © Copyrighted 14-Dec-2009
1Stock PETRONET LNG LTD (PLL) Sector Oil » GAS Market India
Ref No 09-002 Symbol PETRONET BSE at 532522 NSE at PETRONET
Date YMD 09.12.14 CMP (11/Dec) 73.10 Target ST 108 Target LT 235
Year High 84.90 Year Low 31.60 ST Hold 4m LT Hold 28 m
Face Value 10 % Down Peak -12.72% Downside -18% Upside +50% ST
EPS 08-09A 6.91 EPS 09-10 Est. 11.20 EPS 10-11P 15.10 EPS11-12P 19.63
PE 08-09 A 4.63 PE 09-10 Est. 9.5 PE 10-11P 12 PE 11-12P 14
Div/share 1.75 Div Yield% CMP 2.40% Buy Range 48B,58M, Sell Range 92~108 ST
TARGET 4 Mo 108 24 Mo 180 36 MONTHS 275 48 MONTHS 360
Notations A = Actual; Est. = Estimated; *P = Projected; ST=Short Term; LT=Long Term; B= Best; M=Medium;
T=Trading; Upward target could be higher by further 20% due to momentum buying.
Comments The company’s expanded capacity at Dahej has become operational. As result, its quarterly
sales have shot up from 2600 crores to 3400 crores. For 6 months ending Sep09, total
sales have reached Rs 6000 crores. Based on latest quarterly performance, the company
should clock sales of Rs 13000 crores by Mar2010 or for the year 2009-10.which is +55%.
In future, the Kochi refinery will contribute additional 25% and 50% of revenue in 2 years
starting end 2010 onwards. Further, the development of solid cargo port near its LNG
terminal in joint venture with Adani group will contribute further revenue, being 26% owned it
may not be eligible for equity accounting. Its effects are ignored.
The company is on solid growth path, growing at the clip of 35% in terms of volume and
55% to 75% in value terms depending on price realization. It has already secured gas
supply from Qatar for Dahej project, and Australia for Kochi project from 28 to 20 years.
The only unknown variable will be how much Reliance’s Gas project will affect the
company’s present arrangements. It is also not known whether the company has price
escalation or de-escalation clause in its agreement with Qatar and Australia. Reliance is a
subsequent phenomenon. Qatar being the world’s largest and cheapest supplier of gas will
ensure that Petronet will remain highly competitive
Of late; Gas has become the cheapest, non pollutive and most efficient mode of energy.
The use of oil will be relatively less. Due to emphasis on green technology and carbon
emission control, the use of gas will be predominant in every industrial and consumer area.
More and more cities are being converted to using gas (LNG and CNG) as the compulsory
use of energy product to avoid pollution due to Auto vehicles. With more and more
expansion of roads, infra structures, power plants and more production of automobiles, the
use of gas is likely to be much higher than even anticipated.
The projections used above are Author’s projections based on past, present and future
expansion plans. They may differ significantly from prominent brokers or research houses
that draw upon published figures or projections from governmental sources. They usually do
not include the present trend in the industry. When gas becomes plentiful, the use electricity
will be reduced in household (already costly electric heaters are being replaced by LNG or
Piped gas operated cheaper heaters.
The future of the world is on gas, not electricity or oil. This is why this author has been
recommending gas based stocks.
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