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Stockwatch - India - Petronet LNG Ltd.-Ref: 0912-02

Stockwatch - India - Petronet LNG Ltd.-Ref: 0912-02

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Published by Anil Selarka
Kalidas (Anil Selarka) presents his remarkable perspective about Petronet LNG, India's leading gas importer, gas transportation company which may have sales of about US$ 3 Billions by March 2010 and US$ 6 billions in less than 3 years. One of the fastest growth company. The stocks is trading at Rs 73 (= US$ 1.52) which may quadruple in less than 3 years. Solid fundamentals will drive up this remarkable company which is owned by who is who in the petroleum industry such as GAIL (Gas Authorities of India Ltd.),. ONGC (India's leading oil producer), BPCL (India's premier refiner and distributor) , Indian Oil Corporation. One of the finest and safest stocks having brilliant growth prospects. Gas is the future of the world, says the Author. Go long on "gas based stocks"
Kalidas (Anil Selarka) presents his remarkable perspective about Petronet LNG, India's leading gas importer, gas transportation company which may have sales of about US$ 3 Billions by March 2010 and US$ 6 billions in less than 3 years. One of the fastest growth company. The stocks is trading at Rs 73 (= US$ 1.52) which may quadruple in less than 3 years. Solid fundamentals will drive up this remarkable company which is owned by who is who in the petroleum industry such as GAIL (Gas Authorities of India Ltd.),. ONGC (India's leading oil producer), BPCL (India's premier refiner and distributor) , Indian Oil Corporation. One of the finest and safest stocks having brilliant growth prospects. Gas is the future of the world, says the Author. Go long on "gas based stocks"

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Published by: Anil Selarka on Dec 13, 2009
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07/29/2014

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StockWatch
 
Series:
by Kalidas (Anil Selarka) © Copyrighted 14-Dec-2009
1
Stock PETRONET LNG LTD (PLL)Secto
Oil » GAS
MarketIndia
Ref No09-002Symbol
PETRONET
BSE at
532522
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.
 
LinksCompany Website:http://www.petronetlng.com Quarterly Results : Quarterly up to Sep09StockBehavior The stock has been in pressure due to some negative or less optimistic scenario about the company.As result, the stock has been underperforming of late compared to the market. It is only recently thatthe stock has started rising higher breaking strong resistance at about Rs 65.The December 09 quarterly numbers will justify the Author’s projections and there is every possibilitythat the stock may be rated upwards. The company has solid equity partners in the form of GAIL,ONGC, BPCL, and Oil India who are all cash rich companies. The company will not face any financialconstraints at least for next 3 years. The company is less dependent on foreign investment or borrowings as result of which tight money markets abroad will not hurt it in meaningful way.The stock should gain upward momentum once it exceeds Rs 80 and stay above it for at least 7 days.The stock may rise to Rs 108 to Rs 120 until mid April. It also depends on the Reliance effect – theSupreme Court judgment on RPOWER’s gas dependent project. If RIL wins, the RPOWER couldbecome important customer of this company.The company is also known as PLL or Petronet LNG Ltd.Post-PurchaseCare
+
Watch out for RIL’s gas price related policy and its actual production. There has been lot of hypes on Kaveri-Godavri basin gas project. We have to see two directions – what is theactual volume of gas at RIL, its cost structure, and whether RIL will be able to compete Qatar and Australia in gas supply.Also watch out world equity market. It is likely that “currency contagion” may be developingsoon, which may hurt global equity markets. For the time being, it Is advisable to trade 70%of stocks, always keeping 30% intact for long term. If the global equity market does comedown significantly, one may get excellent chance to get into this stock at cheaper price at atime when the company is in full production throttle.Over 4 years time frame, this stock could go up to over Rs 450 or more, presuming there isno equity dilution and company’s Kochi project goes on stream as scheduled. Also, thestocks during good time always overshoot by 20% than fair market value, what we call“momentum buying”. If those stage is reached early, get out at that time and do not enter unless stock corrects significantly (over 40% from Peak)This is perhaps one of the Best Buys into Indian market even at elevated level.SUITABILITY OFINVESTORSKalidas is extremely bullish on this company. This is the stock for all kind of investors,including retirees and widows. Until now, the dividend pay out has not been significant.Presuming overall sales of Rs 24000 crores in less than 3 years, expanded 8% post tax profitmargin, the future profit of Rs 1920 crores is expected of which 25% may be reserved for dividend or Rs 480 crores or Rs 6.4 per share. (there are 75 crores shares outstanding) Thefuture dividend yield based on current price of Rs 73 works out to 8.76%, much higher thancurrent bank deposit rates.
STOCK SWAP
If you own the following stocks or slow movers, you may sell them to raise the cash and Buy the above stock. Theidea is to enhance the potential return in short time frame. Please note that in down market, such swaps may worsenyour position. However, if you are careful as well as lucky to have bought stocks near low, the SWAP will not onlyrecover but also make handsome gain.

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