Petronet’s prospects get a lift from Kochi terminal outlook

Shares of Petronet LNG Ltd are about 3% lower than their pre-covid highs seen in January 2020. This is despite the fact that the stock has appreciated as much as 52% from the lows seen in March.

There is some good news though. The completion of the Kochi-Mangaluru gas pipeline lifts Petronet’s prospects. Delay in the pipeline’s commissioning meant that Petronet was not able to reap the benefits of its 5 mtpa (million tonne per annum) Kochi terminal. While Petronet’s Dahej terminal (17.5 mtpa capacity) clocking optimum utilization levels kept driving earnings, utilization levels at Kochi remained subdued at about 15%. This can now improve to 30% plus level, with gas supplies commencing from the new pipeline and rising further over time.

“The operational break-even for Kochi terminal is at 25% utilization,” said Abhijeet Bora, analyst at Sharekhan. As such, the Kochi terminal can be expected to start contributing to profit.