Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Petronet LNG Ltd (BOM:532522, Financial) reported a significant increase in throughput, achieving 248 TBTU in Q1 FY25, up from 219 TBTU in the previous quarter.
- The company operated at 109% capacity utilization, a notable improvement from 97% in the previous quarter.
- Petronet LNG Ltd (BOM:532522) achieved its highest-ever quarterly PBT of 1,520 crores, marking a 53% increase from the previous quarter.
- The company's PAT grew by 55% from the previous quarter, reaching 1,142 crores.
- The petrochemical project is progressing well, with major contracts awarded and environmental clearances in place.
Negative Points
- The company had to reverse a provision of 63 crores due to higher volumes taken to settle UP obligations, impacting revenue.
- There is uncertainty regarding the exact incremental volume brought in as part of the settlement, which affects financial clarity.
- The CapEx plan for FY25 is substantial, with an estimated 3,500 crores, raising concerns about future financial strain.
- The utilization levels of the Kochi terminal remain low at 25-30%, with full connectivity to the national gas grid not expected until March 2025.
- The company faces challenges in securing long-term capacity bookings for the expanded terminal capacity, which could impact future utilization rates.
Q & A Highlights
Q: Can you explain the reversal of the 63 crore provision and its impact on revenue?
A: The 63 crore provision was reversed because we received the equivalent volume from customers, which was booked at a higher tariff than initially recorded in 2021 and 2022. This reversal is reflected as revenue in the current year. (Vinod Kumar Mishra, Director, Finance)
Q: What is the progress on the petrochemical and capacity expansion projects?
A: The petrochemical project is progressing well with 13 contracts awarded, including licenses for PDH and PP plants. The expansion of the HIS terminal is expected to be completed by March 2025, with a total CapEx of around 570 crores. (Vinod Kumar Mishra, Director, Finance)
Q: What are the current utilization levels and inventory gains for this quarter?
A: The utilization level was 109%, with an inventory gain of 261 crores and a trading margin of 58 crores. Utilization levels are expected to remain around 100% in the near term. (Vinod Kumar Mishra, Director, Finance)
Q: Are there more customers planning to bring in makeup cargoes in Q2 or Q3?
A: Most off-takers are fulfilling their annual delivery plans. Additional volumes are expected after September, once annual commitments are met. (Vinod Kumar Mishra, Director, Finance)
Q: What is the CapEx target for FY 25 and the outlook for the next couple of years?
A: The CapEx target for FY 25 is around 3,500 crores. The CapEx will be higher next year due to increased project activities, with a debt-equity ratio of 70:30 to manage funding. (Vinod Kumar Mishra, Director, Finance)
Q: Can you clarify the impact of the 129 crore provision on other expenditures?
A: The 129 crore provision for user fees is part of other expenditures. This includes a 63 crore reversal of user charges, which is accounted for in other expenses. (Vinod Kumar Mishra, Director, Finance)
Q: What is the status of the take-or-pay contract with off-takers related to the Qatar contract renewal?
A: Discussions are ongoing, and terms are being finalized. The off-takers have committed to the contract, and we will update once the agreement is signed. (Vinod Kumar Mishra, Director, Finance)
Q: What is the outlook for the demand and utilization of the Kochi terminal?
A: The Kochi terminal's utilization is expected to increase once it is connected to the National Gas Grid by March 2025. Initial utilization could reach 50-60%, with potential for further growth. (Vinod Kumar Mishra, Director, Finance)
Q: How is the progress on LNG as auto fuel for heavy vehicles?
A: We are making significant efforts in this area, with several LNG stations being commissioned. The potential is high, and we are in discussions with fleet owners to expand this initiative. (Vinod Kumar Mishra, Director, Finance)
Q: What is the impact of the current energy prices on demand and utilization?
A: Moderate energy prices are conducive to higher utilization levels. The demand for LNG is expected to remain strong, supported by stable prices and increased consumption. (Vinod Kumar Mishra, Director, Finance)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
