WWW.INVESTCHIPS.COM

Petronet LNG Ltd (PLL) announced its Q4 FY07 results, which were below expectations on the revenue front as the volumes from Ras Gas were down by more than 10% qoq to 60.2 TBTUs. The dip was compensated by 4 spot cargos, which provided incremental volumes of 13.1 TBTUs. Operating margins during the quarter slipped by 250bps yoy as spot cargos command lower operating margins in terms of percentage (in absolute terms OPM on spot cargos are higher than regular busines s as they include some element of marketing margins). 121.2% yoy jump in other income translated into a 60.3% yoy growth in PAT to Rs1,060mn. Going ahead, PLL has tied up for 36 spot cargos which it would regasify to supply fuel to the Dabhol power project. With Dahej expansion to 10mn tons slated to commence operations in Q4 FY09, PLL is all set to tap the opportunity provided by the strained demand-supply scenario for natural gas in the country. We believe that PLL will clock a CAGR of 14.1% in topline and 14.3% in PAT during FY07-FY09. We recommend a BUY on the stock with a one year target of Rs54, up 17.4% from current levels. The target price was arrived at by assigning a P/E multiple of 10x to FY09 EPS estimate of Rs5.4.

Click below for the detailed Investment Update:
http://www.indiainfoline.com/content/rep/Investment_Ideas/2007/4/1842007/Petronet_0307.pdf

Warm Regards,

Prayesh Jain
India Infoline Ltd