ANALYSIS - Petronet LNG

OPM up by 370 bps

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4 Petronet LNG: Results

Petronet LNG posted a 54% rise in its net profit for the quarter ended December 2007 compared to corresponding previous year period as operating margins improved 370 bps resulting a 34% increase in its operating profits. However net sales of the company remained stagnant reporting a negligible rise. Other income of the company rose 36%, interest cost declined marginally and depreciation remained sluggish leading to 50% rise in profit before taxes. During the quarter, the company processed and sold 80.27 TBTUs achieving 135% of capacity utilization.

Mr. P Dasgupta MD & CEO stated that the work on the expansion of the existing Dahej Terminal from 5 to 10 MMTPA is on schedule and will be commissioned progressively between July 08 and December 2008. The company is in the final stages of selection of EPC Contractor for setting up 2.5 MMTPA (expandable to 5 MMTPA) Greenfield LNG Terminal at Kochi.

Quarterly Results

For the quarter ended December 2007, Petronet LNG reported marginal increase in sales to Rs 1581.13 crore as against Rs 1575.96 crore in the quarter ended December 2006. The operating profit margins of the company improved by a huge 370 bps to 14.7% resulting a 34% rise in operating profits to Rs 232.05 crore.

Cost of raw material consumed as a percentage to net sales decreased to 83.4% from 86.8% in corresponding previous quarter. Similarly the other expenses was lower by 40 bps to 1.7% and staff cost was stagnant at 0.2%, thus helping sharp expansion in OPM on y-o-y basis.

Other income jumped 36% to Rs 11.96 crore boosting the PBIDT by 34% to Rs 244.01 crore. Interest costs fell 7% to Rs 25.63 crore while depreciation remained constant at Rs 25.66 crore. The resultant PBT was up 50% at Rs 192.73 crore. The effective rate of tax declined to 32.0% compared to 33.9% resulting into 54% rise in PAT to Rs 131.08 crore.

Nine months ended December 2007

For nine months period ended December 2007 Petronet LNG reported a 21% rise in its net sales to Rs 4802.66 crore. The operating profit margins improved by 330 bps causing a 45% spurt in operating profit to Rs 651.30 crore. Other income was 64% higher at Rs 35.69 crore. Interest costs declined 5% to Rs 77.36 crore and depreciation remained sluggish at Rs 76.82 crore. As a result PBT rose 70% to Rs 532.82 crore. The effective rate of tax declined marginally to 33.4% compared to 33.7% resulting into 71% rise in PAT to Rs 354.62 crore.

The scrip is currently trading at Rs 109.

The promoter's shareholding remain unchanged at 50%.