PETRONET - PETRONET LNG LTD. Share Price

In the earnings conference call on May 20, 2025, Petronet LNG Limited's management provided a positive outlook for the company. They reported achieving the highest-ever annual throughput of 934 TBTU and a profit before tax (PBT) of INR 5,275 crores, showing an 11% increase year-over-year. The profit after tax reached INR 3,926 crores. For Q4 FY25, PBT was INR 1,446 crores, compared to INR 996 crores in Q4 FY24, and profit after tax was INR 1,070 crores, up from INR 738 crores in the same quarter last year.

Management indicated that the Dahej Terminal processed 189 TBTU in Q4, with volumes showing slight declines due to higher spot prices and a notable shutdown in fertilizer plants. However, annual throughput at Dahej increased from 865 TBTU to 876 TBTU, and overall LNG volumes rose from 919 TBTU to 934 TBTU. Management stated that they expect continued growth of approximately 5% to 6% in LNG consumption nationally and anticipate robust utilization of terminal capacities.

Key forward-looking points include plans for the Dahej Terminal expansion to increase capacity from 17.5 to 22.5 million tons, expected to be ready in the next 3-4 months. They have renewed a significant contract with Qatar for 7.5 million tons through 2048, ensuring long-term supply commitments with GAIL, Indian Oil, and BPCL for downstream agreements.

The company plans capital expenditure in the range of INR 4,500 crores to INR 5,000 crores for FY26, with specifics including INR 2,500 crores allocated to the Dahej petrochemical project, set to begin production in FY28. The management is optimistic about new terminal developments, like Gopalpur, which has an approved budget of INR 2,300 crores and is expected to take 3-4 years for completion. Overall, the company's management appears confident in sustaining growth and operational performance moving forward.

Q&A Section Summarized from Petronet LNG Limited's Q4 FY25 Earnings Conference Call

1. Question from Probal Sen (ICICI Securities): "Can you provide an update on the capacity expansions and the status of long-term supply contracts?"

Answer: "We are expanding Dahej from 17.5 to 22.5 million tons, expected to be ready in 3-4 months. Discussions for additional volumes are ongoing with parties, and current capacity holders may bring in more volumes under existing contracts. Given the expected increase in liquefaction capacity globally, we believe we will effectively utilize our terminal capacity."

2. Question from Probal Sen (ICICI Securities): "Where do we stand on the renewal of long-term contracts with Qatar?"

Answer: "On February 6, 2024, we renewed our 7.5 million ton contract with Qatar for another 20 years, from 2028 to 2048. Assurance has been received that GAIL, Indian Oil, and BPCL will take the entire volume, with downstream agreements expected to be signed soon."

3. Question from Yogesh Patil (Dolat Capital): "Are there expected delays due to new PNGRB regulations?"

Answer: "After first reading the new PNGRB regulations, we do not foresee any major challenges. Our team will analyze the details more thoroughly, but currently, we believe there will be no significant issues in our terminal operations."

4. Question from Yogesh Patil (Dolat Capital): "Why has the Dahej Terminal volume declined despite an increase in LNG imports?"

Answer: "For Q4 FY25, high spot prices impacted demand, and a significant fertilizer plant shutdown during Feb-Mar further contributed to the decline. However, annualized utilization did show a slight increase."

5. Question from Varatharajan Sivasankaran (Antique Limited): "What is the status of bank guarantees encashed for calendar years '21 and '22?"

Answer: "We haven't encashed any bank guarantees; all payments have been received from offtakers. We are currently in the process of obtaining bank guarantees for calendar year '23."

6. Question from Pratyush Kamal (InCred Capital): "How are UOP charges reversed and what impact will they have on revenue?"

Answer: "When customers fulfill their commitments and bring material later, revenue is recognized at the current tariff, while provisions made for previous years are reversed. This ensures that UOP provisions do not impact our revenue negatively."

7. Question from Kirtan Mehta (Baroda BNP Paribas Mutual Fund): "What is the volume guidance for FY26?"

Answer: "We expect a normal annual growth of 5% to 6% in LNG demand, indicating a consistent volume increase for FY26 as well."

8. Question from Somaiah V (Avendus Spark): "What is the expected timeline for the pipeline connectivity to Kochi?"

Answer: "We are confident that the pipeline connectivity will be completed by the end of the current calendar year, positively impacting Kochi's utilization."

9. Question from S. Ramesh (Nirmal Bang Equities): "Will the Gopalpur project be a land-based terminal or an FSRU?"

Answer: "We are moving forward with a land-based terminal, having tied an MOU with the Odisha government for land procurement. The project cost is expected to rise to about INR 5,000 crores."

These summaries encapsulate key questions and responses related to Petronet's operational updates, financial performance, and guidance, highlighting the company's strategic direction and operational outlook.