Our recommendation on PLNG is premised on robust volume offtake in FY22/23E since (1) the bounce back in gas demand with the opening of economy will ensure high LNG imports, in turn allowing full utilisation at Dahej on its expanded capacity and (2) Kochi terminal would see higher utilisation as the Kochi-Mangalore pipeline has been commissioned. 4Q EBITDA/APAT were 21/32% below our estimates, owing to a 17% fall in revenue, higher-than-anticipated employee costs and other expenses, and higher-than-expected depreciation.

Financial performance: 4Q EBITDA came to INR 11bn -18/+56% QoQ/YoY, clocking in an EBITDA margin of 14.4% (-382/+626bps QoQ/YoY). The sequential fall in EBITDA is on account of inclusion of one-off expenses: (1) forex loss of INR 0.2bn and (2) CSR expense of INR 0.6bn in opex of 4Q.

Terminal-wise performance: Utilisation at Dahej/Kochi stood at 91/22%. Volumes at Dahej/Kochi stood at 204/14 tbtu in 4Q with overall volumes at 218 tbtu (-7/-1% QoQ/YoY). Services volumes at Dahej came at ~2mmt (97tbtu) -7/-8% QoQ/YoY. Volumes dipped in 4Q owing to lower consumption, courtesy high spot LNG prices. Kochi terminal utilisation is expected to rise from current levels to 30% by FY22 end, as volume will ramp up, and will increase further in the coming years with completion of connectivity to Bengaluru and expansion of the CGD network in the adjoining cities.

Call takeaways: (1) PLNG has extensive Capex plans for the next 5 years with allocation of INR ~150bn on the following projects: addition of 2 tanks at the Dahej terminal, addition of jetties, Dahej terminal's capacity expansion, tanker capacity expansion in Dahej and Kochi, introduction of 1,000 LNG stations, biogas project with MoPNG, construction of a terminal on the east coast of India and addition of a tank at the Kochi terminal. Capex target for FY22 is INR 5.3bn. (2) The Board recommended a final dividend of INR 3.5/sh for FY21. (3) Utilisation at the Dahej terminal was impacted in April'21 and May'21 owing to the COVID-induced lockdown, although it recovered in June'21. The current utilisation at Dahej is ~88%. The management guided for an overall capacity utilisation at Dahej/Kochi of ~95/30% in FY22.