We expect near-term growth to pick up with the Kochi Mangalore pipeline now commissioned which will open up new customers. Interestingly, the price of newly discovered domestic gas is linked to the global LNG price. With global LNG prices falling (and likely to remain weak), crude prices continuing to rise and economy recovering rapidly, we expect LNG offtake to increase in India during FY22. We estimate this will drive 8% and 17% earnings growth for PLNG in FY22 and FY23.
Longer-term growth pipeline is still a work in progress
While PLNG continues to evaluate new terminals in Sri Lanka and the East Coast of India, big capacity growth plan is still some distance away. However, PLNG has some relatively easier growth planned with an increase in capacity at Dahej (by virtue of additional terminals and jetty) which should position it once again as one of the lowest-cost re-gasifiers in a region that has the potential for more gas demand. We still assume Kochi utilisation at 30% in FY22 and peak utilisation at 50% as uncertainties on tariffs still remain but we also see upside risk to utilisation as connectivity is finally available.
