Petronet LNG rating: ‘Buy’; Q1FY21 results were modestly above estimates

PLNG’s Q1FY21 results were modestly ahead of our estimates reflecting marginally higher-than-expected volumes amid a challenging environment. We retain our constructive stance seeking comfort from prudence on capital allocation, limited risks to volumes/tariffs/earnings and attractive valuations at 12X FY2022e EPS. We reiterate Buy with FV of Rs 300, expecting the company to deliver healthy 10-11% CAGR in earnings over the next 3-5 years driven by higher volumes and tariffs.

Q1FY21 results modestly above estimates with volumes moderating

PLNG’s Ebitda declined 11% y-o-y and 10% q-o-q to Rs 9.1 bn in Q1FY21, 3% above our estimate reflecting modestly higher-than-expected volumes and a sharper-than-anticipated reduction in operating expenses. Overall volumes were 2% above our estimate, declining 13% q-o-q and 16% y-o-y to 190 tn BTUs.