Analyst's corner

Petronet LNG
Reco Price: Rs113
Target Price: Rs135

Petronet LNG (PLNG) board has given sanction for expanding the capacity of Kochi Terminal from 2.5 MMT to 5 MMT at an incremental cost of Rs 450 crore. The overall construction of Kochi terminal is running on schedule and was 60 per cent complete at the end of Q2FY11. The terminal is expected to achieve mechanical completion by Q1CY12. Margins for this terminal are pegged at 16 per cent equity IRR. This implies re-gasification charges/revenues of Rs 77.6/mmbtu for FY13 and Rs 46.2/mmbtu for FY14 post expansion. Key triggers include tying up additional long term supplies of LNG for the Kochi terminal. Timely completion of GAIL’s Kochi-Mangalore-Bangalore pipeline and Kochi-Kayakulam pipeline remain a key risk for the project. Maintain ‘BUY’. 

—Edelweiss Securities