I am tracking this news but Not able to find any follow up on these news . Good news is that gail pipeline resumes operation. Inspection of pipeline is pending which got delayed by covid. After inspection transmission will transfer and volumes at kochi will increase
The way this pipeline has been delayed continuously for more than five years on one pretext after another, it appears that the delay could have been deliberate. The modern pipe laying and tunneling machines are very fast and capable. On paper It is not a big project. Now these reports of corruption against top level of PLL create a doubt about all the earlier excuses trotted out by GAIL for years and accepted by PLL without a murmur. There is no report that they ever complained to Ministry of Petroleum about the huge losses PLL was suffering continuously for years.
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My inputs on the business model:
Pros:
∆ Buyers who are shareholders as well will ensure minimum OPM;
∆ Will be a preferred Supplier even with competition;
∆ Established operations with largest capacity;
∆ Growth of NG as a fuel is guaranteed in future.
Cons:
∆ OPM will always be capped by shareholder /buyers;
∆ Shareholders themselves are emerging as competitors;
∆ Slow decision making process;
∆ Dependent on evacuation infra for growth - Pipeline growth is slow and tedious;
∆ Management quality can be suspect (inefficient, lacking expertise, corrupt, etc);
∆ Cash flow allocation can be arbitrary;
∆ Subject to govt/ regulatory interference;
∆ Fall in NG prices will maintain OPM but reduce OP.
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News in ET on 26th that Qatar Govt has agreed to discuss the terms of long term contract which is valid till 2028.This contract has become out of tune and irrelevant due to drastic change in spot lng rates. The most appropriate course of action is to suspend the contract for at least one year, buy on spot basis and renegotiate in 2021. It is foolish to expect the Indian industry to pay more than double for gas and expect the consuming industries to remain competitive with imports. In 2016 the govt was able to revise the price downward but it has again gone out of the limit. There is a good chance that Petronet will get a better deal.
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hi All
very valuable posts above.
i have been unable to wrap my head around the volume and realization numbers -
| Particulars | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
|---|---|---|---|---|---|---|---|---|---|---|
| LNG Sales | 10,603 | 13,106 | 22,451 | 31,297 | 37,545 | 39,093 | 26,248 | 23,396 | 29,048 | 36,620 |
| LNG Purchase | 9,665 | 11,801 | 20,587 | 29,212 | 35,849 | 37,611 | 25,076 | 21,417 | 26,690 | 34,417 |
| LNG Contribution | 938 | 1,305 | 1,864 | 2,085 | 1,695 | 1,482 | 1,172 | 1,979 | 2,358 | 2,203 |
| Regas + Others | 46 | 92 | 245 | 170 | 203 | 408 | 886 | 1,220 | 1,551 | 1,776 |
| Net Revenues | 984 | 1,396 | 2,109 | 2,256 | 1,898 | 1,890 | 2,058 | 3,199 | 3,908 | 3,978 |
| increase by | 42% | 51% | 7% | -16% | 0% | 9% | 55% | 22% | 2% | |
| Volumes | ||||||||||
| Dahej LNG - TBTU | 384 | 440 | 548 | 525 | 494 | 521 | 566 | 714 | 816 | 820 |
| increase by | 15% | 24% | -4% | -6% | 5% | 9% | 26% | 14% | 1% | |
| Realization per MMBtu | 25.6 | 31.7 | 38.5 | 43 | 38.4 | 36.3 | 36.4 | 44.8 | 47.9 | 48.5 |
| increase by | 24% | 21% | 12% | -11% | -6% | 0% | 23% | 7% | 1% |
ideally, the realization per mmBTU should increase by 5% every year and not decline. why this volatility?
The variations in realizations could mean one of the following –
- The contracts signed by Petronet with GAIL / other offtakers are not completely pass through and there is some inventory risk that rests with Petronet.
- Petronet also buys and sells spot LNG as a trader and has these variations on account of profit/loss on trading.
- The volumes reported by the company are only for Dahej, while revenues include Kochi terminal too. However, this error should not be significant since the Kochi terminal has been around since 2015 and has been significantly underutilised.
For now, I have been unable to understand this. And with the possibility of point #1 or #2 above, there is much more risk in the company than what currently appears to be.
Further, i dropped this idea post allegation of corruption on the senior management.
you could refer to the whole thesis here -
happy investing!
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Petronet LNG:
Concall Summary dated 12th Nov 2020
Revenue:₹6,235.8 cr (▼33.4%) Net Profit: ₹919.5 cr (▼15.6%)
FINANCIAL PERFORMANCE
• Revenue from operations decreased by 33.39% YoY and increased by 27.69% QoQ to ₹6,235.78 crore in Q2 FY21.
• Profit before tax stood at ₹1,234.74 crore in the quarter v/s ₹870.64 crore in Q2 FY20.
• Net profit degrew by 15.57% YoY and grew by 83.97% QoQ to ₹919.47 crore in Q2 FY21. There was substantial reduction in tax liability in terms of deferred taxation in the last year due to decline in tax rate to 22%.
• The Board of Directors approved a special interim dividend of ₹8 per share (80% on face value).
BUSINESS PERFORMANCE
• The results were better QoQ on account of resurgence of demand to pre-Covid level, robust operational efficiency and effective commercial planning.
• The overall utilization level was 109% in the quarter as compared to 81% in Q1 FY21 and 108% in Q2 FY20. The utilization of Kochi terminal was 17% v/s 14% in the last quarter and 16% last year.
• During the quarter, the company processed 243 TBTU (trillion British thermal units) of liquified natural gas (LNG) at the Dahej terminal as against 181 TBTU during Q1 and 240 TBTU in Q2 FY20.
• The revenue from regasification service was ₹678 crore as compared to ₹500 crore in Q1 and ₹631 crore in Q2 FY20.
• The margins (below gross margin) were higher due to surge of ₹86 crore QoQ and ₹154 crore YoY on account of impact of Ind AS 116. The impact of revaluation of inventory was ~₹70 crore.
CAPEX AND UPDATE
• The capex in H1 FY21 stood at ₹15 crore.
• The company is building additional tanks at Dahej at the cost of ~₹1,200 crore which is expected to complete within this year and a jetty at the cost of ~₹1,300 crore in 2-3 years.
• A committee has been formed for the concern on lower tariff for Kochi terminal. They are likely to arrive at a conclusion within Q3. The tariff for FY20 was 79% and in the current year, it has increased by 5%.
FUTURE OUTLOOK
• The overall capex estimate for H2 is ₹105 crore. The capex on Sri Lanka floating storage and regasification unit (FSRU) project is not expected to incur in the current financial year.
• The operating expense in H2 is likely to be higher due to carry forward of some maintenance expense from H1.
• The company expects to increase the volume and capacity utilization of the Kochi terminal in Q3. The breakeven of this terminal is at 25% of operational level.
• It expects to set up a terminal in the east coast within a year.
Disclaimer: Invested in Core PF.
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Finally Kochi Mangalore pipeline is open. Kochi utilization is still around 17-18% and there will be a gradual increase in volume . City gas is still in nascent state in kerala and it will take years to go for full utilization. BPCL hold stake in petronet and if BPCL sale happens , owned company will go for stake sale in Indraprasta gas and petronet and that will put pressure up on share. Good part is company is providing around 5% dividend recently declared 8rs dividend and for full year it will be around 12-15 rs
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Just to add - city pipeline supply for Mangalore is also been scoped as one my relative was asked to share their interest.
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Another good quarter from petronet , utliization in kochi terminal will increase to 30% but it will take time to reach 80% only once kochi banglore pipeline is finished . Management is going slow in capex i guess , plans to start cng stations is in progress (it is long overdue i guess) . Similarly srinlanka project is again long overdue. Prospects are good but not much price movement it is rangebound in 220-260
Disc:invested
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Any news on BPCL stake sale and how it will affect Petronet?
Significant Differences in dividend amounts in Unaudited and Audited cash flow statement from company . Why ? Pages 9 and 16 respectively.
Two different statement standalone and consolidated … Both are audited year end statement….Always look at consolidated CFS for large organisation …
Dis Invested
As per the Q4 concall, Petronet do not think that BPCL will reduce the stake.
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Huge capex plans for the next few years per Q4 concall! Can anybody shed some light on their plan for lng retailing? They are planning for a 8000cr capex on lng retailing in the next 4-5 years. From my understanding, retailing is a very low margin business. So even though retailing will help increase revenue by increasing sales, with low margin the ROCE will get diluted. But higher sales would also mean higher utilization of their terminals and increased ROCE on the regasification business. Can anyone provide some insights regarding lng retailing and if my understanding is correct?
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Is it because of the huge Capex plans in future that market is not valuing this company similar to other energy companies? Company has managed to grow the PAT at considerable rate even when the revenue growth remains mute/flat, if somebody can throw light on the facts due to which valuation of this company continue to be low vs others?
Why has Gas based power plant plf of NTPC decreased from 25% to 8%?
Are rising prices of gas spelling trouble for the sector? If so it could be transitory Or is there another reason for this drop in PLF of NTPC’s Gas based power plants…
yes, the RLNG prices has increased considerably and the APM gas to power sector is coming down YoY. last year this time RLNG prices were at the lowest and most gujarat based gas plants operated through RLNG but this year the spot prices has touched almost USD 14 per mmbtu which is way too high for indian power sector