HDFC Securities’ predicts a robust volume offtake in FY22/23E as benign LNG prices will ensure its high imports, in turn allowing full utilisation at Dahej on its expanded capacity, and with the completion of the Kochi-Mangalore pipeline, it will raise utilisation at the Kochi terminal.

3Q EBITDA/APAT was 11/13% above our estimates, owing to higher-than-anticipated marketing margin and lower-than-anticipated depreciation.

Financial performance: 3Q EBITDA came to INR 13bn -2/+21% QoQ/YoY, clocking in a healthy EBITDA margin of 18% (-364/+579bps QoQ/YoY). It is mainly on account of higher utilisation, higher marketing margins, reduced opex due to cut down in publicity, repairs and power costs, the positive impact of inventory revaluations, and impact of Ind AS 116. Calculated marketing margin was INR 2.5bn (HSIE INR 1.8bn).

Terminal-wise performance: Utilisation at Dahej/Kochi stood at 100/20%. Services volumes at Dahej came at 2.1mmt (104tbtu) -23/-6% QoQ/YoY. Kochi terminal utilisation is expected to rise from current levels as volume will ramp up to 30% in FY22 and further to 60% by FY24 with completion of connectivity to Bengaluru and expansion of the CGD network in the adjoining cities.

Call takeaways:

• Capex incurred in 9MFY21 is INR 0.65bn from the plan of INR 3.5bn for FY21. Capex spending was affected by COVID-led labor disruption. Capex target for FY22 is INR 5.3bn, out of which INR 1.25bn is to be spent on adding two new tanks at Dahej. PLNG plans to expand Dahej's capacity to 20 MMTPA in the next three years with a Capex of INR 4.0- 4.5bn.
• The Board has approved incorporation of a wholly owned subsidiary company of PLNG for undertaking GUCD operations, LNG Bunkering and other allied services. (3) Trading gains of INR 0.54bn and inventory gains of INR 0.6bn were witnessed in 3Q.

(Harshad Katkar, Institutional Research Analyst, HDFC Securities & Nilesh Ghuge, Institutional Research Analyst, HDFC Securities)