25 September 2017
Oil & Gas
TP: INR275 (+20%)
Firm utilization continues
Dahej continues to lead; Kochi to improve utilization
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
12M Avg Val (INR M)
Free float (%)
242 / 163
Our channel checks suggest more than full utilization at Dahej and marginally
increased throughput at the Kochi LNG terminal.
We continue believing that increased domestic gas production and upcoming
competition would not be a significant risk to utilization.
Reiterate Buy with a target price of INR275.
Firm utilization at Dahej
On capacity of 15mmtpa, PLNG has firm take-or-pay utilization contracts of
Our channel checks further suggest that LNG arrival at Dahej is happening at a
rate of 16mmtpa, reflecting above full utilization.
Financials Snapshot (INR b)
Do not see much competition
Among the existing terminals, Dabhol would remain underutilized due to the
lack of breakwater facility, the tender for which has not yet been awarded.
GSPC/Adani’s 5mmtpa Mundra LNG terminal is expected to come in early
2018, with the completion of 60km Mundra-Anjar pipeline being key to this.
Additionally, capacity of the existing 170km 3mmtpa Anjar-Chotila network
needs to be augmented to handle the full load. Tender for this has not yet
IOCL’s Ennore LNG terminal would come up in 2019, and service an entirely
new set of consumers without being any threat to PLNG.
Shareholding pattern (%)
Sep-16 Jun-16 Sep-15
EPS CAGR of 17% over FY17-20
FII Includes depository receipts
Stock Performance (1-year)
Sensex - Rebased
PLNG is likely to continue gradual capacity addition at Dahej terminal to benefit
from the evolving LNG opportunity in India. We expect its total capacity to
reach 22.5mmtpa by FY20.
Firm offtake contracts at Dahej terminal and ramp-up of Kochi terminal would
enable PLNG to post volume CAGR of 10% over FY17-20. We do not assume
any escalation in Kochi re-gas charge 2018 onward.
Assured volume growth and tariff hikes would help PLNG to post 16%/17%
EBITDA/PAT CAGR over FY17-20.
The stock is trading at 12.7x FY19E EPS of INR18 and 8.2x FY19E EV/EBITDA. We
value the stock using DCF (WACC of 11%, terminal growth of 3%). With a target
price of INR275, we reiterate our
rating on the stock.
Key triggers to watch out: (i) progress on the completion of Kochi-Mangalore
pipeline, (ii) ramp-up of domestic gas production and (iii) progress of Dahej
expansion from 15mmtpa to 17.5mmtpa.
Valuation and view
Swarnendu Bhushan – Research Analyst
(Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529
Abhinil Dahiwale – Research Analyst
(Abhinil.Dahiwale@motilaloswal.com); +91 22 3980 4309
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.