Petronet LNG gets Centrum’s sell tag

Petronet LNG (PLNG) reported a robust 124 per cent capacity utilisation at Dahej as compared to 129.6 per cent in Q1FY17. The reloading income at Kochi and higher MTM treasury income boosted profit after tax. However, the brokerage expects utilisation at Dahej to taper-off on a higher base of nameplate capacity. PLNG provides firm visibility on offtake arrangement, but the brokerage remains cautiously optimistic due to weak demand environment, likely start of Mundra LNG terminal in CY17 and simultaneous revival of Dabhol and Hazira terminals. The management remained not confident on the entire offtake post expansion and highlighted that regas charges may be subject to review, which is not encouraging. Although PLNG has guided for take-pay revenue with GAIL, IOCL, GSPC, BPCL on Dahej expansion, its historical trend reveal that recovery will be challenging. A lower offtake without take-pay revenue coupled with a possible haircut in regas tariffs poses risks to earnings growth.