by Kalidas (Anil Selarka) © Copyrighted 14-Dec-2009
Stock PETRONET LNG LTD (PLL)Sector
Oil » GAS
NSE atPETRONETDate YMD09.12.14CMP (11/Dec)73.10Target ST108Target LT235Year High84.90Year Low31.60 ST Hold4mLT Hold28 mFace Value10% Down Peak-12.72%Downside-18%Upside+50% ST+275% LTEPS 08-09A6.91EPS 09-10 Est.11.20EPS 10-11P15.10EPS11-12P19.63PE 08-09 A4.63PE 09-10 Est.9.5PE 10-11P12PE 11-12P14Div/share1.75Div Yield% CMP2.40%Buy Range48B,58M,75T STSell Range92~108 STTARGET 4 Mo10824 Mo18036 MONTHS27548 MONTHS360NotationsA = Actual; Est. = Estimated; *P = Projected; ST=Short Term; LT=Long Term; B= Best; M=Medium;T=Trading; Upward target could be higher by further 20% due to momentum buying.Comments
The company’s expanded capacity at Dahej has become operational. As result, its quarterlysales have shot up from 2600 crores to 3400 crores. For 6 months ending Sep09, totalsales have reached Rs 6000 crores. Based on latest quarterly performance, the companyshould clock sales of Rs 13000 crores by Mar2010 or for the year 2009-10.which is +55%.In future, the Kochi refinery will contribute additional 25% and 50% of revenue in 2 yearsstarting end 2010 onwards. Further, the development of solid cargo port near its LNGterminal in joint venture with Adani group will contribute further revenue, being 26% owned itmay not be eligible for equity accounting. Its effects are ignored.The company is on solid growth path, growing at the clip of 35% in terms of volume and55% to 75% in value terms depending on price realization. It has already secured gassupply from Qatar for Dahej project, and Australia for Kochi project from 28 to 20 years.The only unknown variable will be how much Reliance’s Gas project will affect thecompany’s present arrangements. It is also not known whether the company has priceescalation or de-escalation clause in its agreement with Qatar and Australia. Reliance is asubsequent phenomenon. Qatar being the world’s largest and cheapest supplier of gas willensure that Petronet will remain highly competitiveOf late; Gas has become the cheapest, non pollutive and most efficient mode of energy.The use of oil will be relatively less. Due to emphasis on green technology and carbonemission control, the use of gas will be predominant in every industrial and consumer area.More and more cities are being converted to using gas (LNG and CNG) as the compulsoryuse of energy product to avoid pollution due to Auto vehicles. With more and moreexpansion of roads, infra structures, power plants and more production of automobiles, theuse of gas is likely to be much higher than even anticipated.The projections used above are Author’s projections based on past, present and futureexpansion plans. They may differ significantly from prominent brokers or research housesthat draw upon published figures or projections from governmental sources. They usually donot include the present trend in the industry. When gas becomes plentiful, the use electricitywill be reduced in household (already costly electric heaters are being replaced by LNG or Piped gas operated cheaper heaters.The future of the world is on gas, not electricity or oil. This is why this author has beenrecommending gas based stocks.