INDIA

Petronet LNG

Oil & Gas

Result Update

06 September 2016
Target Price

Outlook cautiously optimistic: PLNG provides firm visibility on offtake arrangement,

but we remain cautiously optimistic due to weak demand environment, likely start of
Mundra LNG terminal in CY17 and simultaneous revival of Dabhol and Hazira terminals.
Also, the management remained not confident on the entire offtake post expansion
and highlighted that regas charges may be subject to review, which is not encouraging;
even so, we have built in optimism. Although PLNG has guided for take-pay revenue
with GAIL/IOCL/GSPC/BPCL on Dahej expansion, its historical trend and our channel
checks reveal that recovery will be challenging, which management confirmed that offtakers will have flexibility on lower offtake in the initial period. A lower offtake without
take-pay revenue coupled with a possible hair-cut in regas tariffs poses risks to our earnings.

Valuations and key risks: Our TP of Rs256 is based on equal weight assigned to fair value
derived on (1) DCFF and (2) PEx assigned to Mar-18 EPS. Key risks to our rating are
changes in (1) capacity utilisation and (2) trading/marketing margins.
Q1FY17
212
6,425
3,779

Q1FY16
(899)
3,611
2,475

YoY (%)
(123.6)
77.9
52.7

Q4FY16
(982)
4,466
2,393

QoQ (%)
(121.6)
43.9
57.9

Q1FY17E
(1,012)
4,682
2,724

Var (%)
(121.0)
37.2
38.7

105.3
12.8
50.1
129.6
4.6
0.05

67.1
25.6
38.9
98.4
9.6
(0.24)

57.0
(50.0)
28.7

109.4
17.6
26.5
116.5
8.0
(0.37)

(3.8)
(27.6)
88.7

102.0
6.2
54.3
127.5
8.0
(0.25)

3.2
106.1
(7.8)

(120.8)

(113.6)

PLNG IN

27.6%

Curr Shares O/S (mn)

750.0

Previous Target

Rs217

Diluted Shares O/S(mn)

750.0

Previous Rating

Sell

Mkt Cap (Rsbn/USDbn)

Price Performance (%)*

265.1/4

52 Wk H / L (Rs)

358.6/169.4
358.6/102.5

1M

6M

1Yr

5 Year H / L (Rs)

PLNG IN

15.6

41.1

99.0

Daily Vol. (3M NSE Avg.)

NIFTY

1.5

17.7

15.1

1160855

*as on 2 September 2016; Source: Bloomberg, Centrum Research

Shareholding pattern (%)*

Jun-16

Mar-16

Dec-15

Sep-15

Promoter

50.0

50.0

50.0

50.0

FIIs

21.3

21.6

22.3

22.5

6.5

6.1

5.3

5.1

22.3

22.3

22.4

22.5

Dom. Inst.
Public & Others

Source: BSE, *as on 2 September 2016

Volume and Margins profile

14
12
10
8
6
4
2
-

114 120

113
75

150

118

127

93

84

100
63
50

25

31

28

28

39

72

79

27

50

1QFY17

4QFY16

3QFY16

2QFY16

4QFY15

Project updates: The Dahej expansion by 5MMTPA has been partly commissioned with
3MMTPA in Aug-16, and storage tanks will be commissioned in Oct-16; thus, the project
would attain full commissioning in Oct16. The company is likely to award tenders to
further expand the Dahej capacity by 2.5MMTPA (for completion in FY19/20). The
company firmly guided that despite receipt of approval to set up the Gangavaram
terminal, it will not pursue the project until offtake is tied up. The company is separately
evaluating plans to set up an FSRU at Andaman Islands apart from pursuing projects in
Bangladesh/Sri Lanka. At Kochi terminal, management has guided for volume recovery
after it is connected with Mangalore city over next 2 years. However, as laying of
pipeline remains sub-judice in Tamil Nadu (Kochi-Bangalore), the pipeline may remain
under-utilised; nonetheless, we extend optimism.

Bloomberg Code

Downside

3QFY15

Earnings snapshot and outlook: EBITDA at Rs6.4bn (+77.9% YoY and +43.9% QoQ)
jumped sharply owing to high capacity utilisation at Dahej, positive trading/marketing
margins and non-recurrence of under-recovery of shipping charges in Q1FY17. We infer
a positive trading/marketing margin of Rs0.2bn or USD0.05/MMBTU. Currently, to
benefit from low term price and planned maintenance shutdown of Dabhol plant, the
demand, and hence utilisation, will remain strong in 1HFY17. Utilisation at Kochi
terminal declined to 4.6% from 8% QoQ on the back of lower cargo reloading vs 10%
estimated for FY17E. Although earnings will rebound, core RoE pegged at 14%/15%/22%
for FY16/17E/18E will decline vs average of 30% over FY11-16.

Key Data

Rs353.4

2QFY15

We retain Sell rating, with a revised TP of Rs256. The company reported a robust
129.6% capacity utilisation at Dahej vs 116.5% in Q4FY16 and slightly higher than our
estimate of 127.5%. We infer positive trading/marketing margins which was a
surprise for the street and hence higher than our and streets estimated earnings.
However, momentary disruption in domestic gas output and non-availability of
Dabhol terminal led to high utilisation, which is not sustainable on a full-year basis.
We see the renegotiated RasGas contract as a neutral event and are not as upbeat as
the street, as sales mix will change, and this does not alter the demand landscape,
which is static. Historically, Petronet has traded at higher valuations when RoE was
+28%; however, low RoE over the forecast period, lack of pricing power, trading at
Mean+SD+3.8 on PE(x) on one-year forward basis, risk of hair-cut in regas tariffs and
risk of non-recovery of take-pay charges make us underweight.

Y/E Mar Stand. (Rsmn)

Trading/marketing margins
EBITDA
PAT
Operating Metrics:
Long term vol.(TBTU)
Spot vol. (TBTU)
Tolling vol. (TBTU)
Capacity utilization -Dahej (%)
Capacity utilization Kochi (%)
Mktg./Trading margin (USD/TBTU)

Rs256

CMP*

1QFY16

Positives factored in, retain Sell

1QFY15

SELL

Term + Spot Volumes (TBTU) RHS

Tolling Volumes (TBTU) RHS
EBITDA margin (%) LHS
PAT margin (%) LHS

Source: Company, Centrum Research

Earning Revision
FY17E

FY18E

Particulars
(Rs bn)

New

Old

Chg (%)

New

Old

Chg (%)

Revenue

256.0

254.9

0.4

303.2

303.2

0.0

EBITDA

21.0

19.1

10.2

32.3

32.3

0.0

PAT

11.4

10.0

14.5

18.7

18.7

0.0

Source: Centrum Research Estimates

Centrum vs. Bloomberg Consensus*

FY17E
Particulars
(Rsbn)

Centrum BBG

FY18E
BBG

Chg (%)

Revenue

256.0

274.2

Chg (%) Centrum

(6.6)

303.2

343.1

(11.6)

EBITDA

21.0

21.3

(1.4)

32.3

28.8

12.2

PAT

11.4

11.9

(4.2)

18.7

16.9

10.7

BUY

SELL

HOLD

Target Price
(Rs)

Centrum
Target
Price
(Rs)

20

13

319

256

Bloomberg Consensus*

Variance
(%)

(24.6)

*as on 2 September 2016; Source: Bloomberg, Centrum Research Estimates

Sachin Mehta, sachin.mehta@centrum.co.in, 91 22 4215 9854

(120.2)

Source: Company, Centrum Research Estimates

Y/E Mar (Rsmn)
FY14
FY15
FY16
FY17E
FY18E

Revenue
3,77,476
3,95,010
2,71,334
2,56,029
3,03,180

YoY (%)
20.0
4.6
(31.3)
(5.6)
18.4

EBITDA
14,984
14,390
15,903
21,043
32,342

EBITDA (%)
4.0
3.7
6.1
8.3
11.0

RPAT
7,119
8,825
9,140
11,393
18,728

YoY (%)
(38.1)
24.0
3.6
24.6
64.4

DEPS Rs.
9.5
11.8
12.2
15.2
25.0

RoE (%)
14.9
16.5
15.2
16.7
23.4

RoCE (%)
10.6
9.8
10.4
11.7
15.9

Source: Company, Centrum Research Estimates

Centrum Equity Research is available on Bloomberg, Thomson Reuters and FactSet

P/E (x)
37.2
30.0
29.0
23.3
14.2

P/B (x)
5.3
4.7
4.2
3.6
3.0

Valuation and View

Our TP of Rs256 is based on equal weight assigned to value derived on (1) DCFF and (2) PE(x) assigned to Mar18E
EPS. It is imperative that the fair price captures long-term prospects as well as the earnings outlook in the near
term; hence, we have assigned equal weight to DCFF and PE(x). We revise our TP to Rs256, which factors in the
impact of lower CoE (Rf revised at 7.3% vs 8% factored in earlier). Since Management has not provided clarity on
internal fuel consumption, we have not quantified the positive benefit retained by the company during Q1FY17
(on highest ever utilisation) which possibly could have off-set the possible negative trading/marketing margins.
The impact of IND-AS was negligible, noting that if FY16 earnings were restated under INDA-AS, it would have
resulted in RPAT of Rs9.1bn (-0.4% impact) vs Rs9.1bn reported under Indian GAAP.
We have revised our earnings in FY17E to factor in early commissioning of Dahej terminal expansion. The
company has guided for a higher tax rate of 30% vs 26-27% factored in, but we have not currently revised our
earnings on this count and await Q2FY17 result.
The company reported a healthy cash balance of Rs21.8bn in FY16E vs Rs3.6bn in FY15. This is attributed to a
momentary efficiency in net working capital cycle (ex-cash), which turned negative at (18.4) days in FY16 vs 8.1
days in FY15. The improvement is considered momentary as the company processed high volume of spot and
tolling cargoes (51% share in FY16 vs 34% in FY15) vs long-term cargoes, thus leading to lower inventory holding
period and higher credit period and consequent high cash generation. This will moderate in FY17E (in line with its
historical trend) as long-term volume will substitute spot and tolling cargoes (26% share in FY17E).
MoPs policy on pooling of gas prices is seen as a non-event (in view of low spot RLNG price environment) as we have
built in optimistic utilisation. Instead, it will be seen as negative if Petronet LNG is forced to take 50% hair-cut in its regas
charges vs normalised regas charges factored in over the forecast period and earned by the company in FYTD.
As per FY16 Annual report, we note that the company has potent risk in the form of materialisation of contingent
liabilities of Rs39.7bn (43% of RPAT or 6% of Net worth in FY16). Of which, Rs28.5bn (72% of the total) relates to
commercial/contractual disputes and the balance pertains to tax related matters.

Exhibit 1: Valuation
Valuation Method

Fair Price (Rs)

DCFF, WACC of 10.5%

P/Ex of 11.1x assigned to Mar-18E EPS
Fair price being the average of price based on DCFF and P/Ex (rounded off)

235
276
256

Source: Centrum Research Estimates

,,

Exhibit 2: Sensitivity Analysis to FY17E

Sensitivity to key variables

change

Change in spot volumes

Change in trading/marketing margin

0.5MMTPA
0.1USD/MMBTU

%impact on EBITDA

%impact on EPS

5.0
5.7

8.5
7.8

Source: Company, Centrum Research Estimates

Exhibit 3: 1 year forward P/B chart

Exhibit 4: 1 year forward P/E chart

4.0

22

3.5

18

3.0

14

2.5

10

2.0

1.5

Mean
Mean - Std Dev

Source: Bloomberg, Company, Centrum Research Estimates

P/E

Mean

Mean + Std Dev

Mean - Std Dev

Sep-16

Mar-16

Sep-15

Mar-15

Sep-14

Mar-14

Sep-13

Mar-13

Sep-12

Mar-12

Sep-11

Sep-10

Sep-16

Mar-16

Sep-15

Mar-15

Sep-14

Mar-14

Sep-13

Mar-13

Sep-12

Mar-12

Sep-11

Mar-11

Sep-10

P/B
Mean + Std Dev

Mar-11

1.0

Source: Bloomberg, Company, Centrum Research Estimates

Exhibit 5: Comparative Valuations

Company
Petronet LNG
GAIL India Ltd
GSPL
Guj. Gas^
IGL^
MG:L^*

Mkt Cap
(Rsmn)
265.1
502.0
86.0
88.3
110.6
62.8

CAGR FY16-FY18E (%)

Rev.
EBITDA
PAT
5.7
42.6
43.1
3.3
25.4
27.0
5.2
10.1
8.1
3.5
24.2
75.9
7.8
15.2
13.8
2.8
5.6
3.7

EBITDA Margin (%)

FY16 FY17E FY18E
6.1
8.3
11.0
8.3
10.0
10.3
91.1
91.0
90.5
12.0
17.0
17.2
21.0
24.6
24.0
23.5
24.7
24.8

FY16
29.0
21.8
19.4
56.7
23.8
20.8

PE (x)
FY17E FY18E
23.3
14.2
16.2
13.5
16.7
16.6
23.2
18.1
20.3
18.5
20.3
19.4

FY16
4.2
1.6
2.2
4.2
4.5
4.2

P/B (x)
FY17E FY18E
3.6
3.0
1.5
1.4
2.0
1.8
3.6
3.1
3.9
3.4
4.0
3.7

FY16
15.2
7.7
11.7
NA
20.3
22.3

RoE (%)
FY17E FY18E
16.7
23.4
9.8
10.8
12.3
11.3
16.2
17.9
20.6
19.5
21.0
20.1

Div Yield (%)

FY16 FY17E FY18E
0.7
0.7
1.4
1.4
1.5
1.5
1.0
1.0
1.0
NA
0.8
1.1
NA
1.0
1.1
NA
2.6
2.4

Source: Company, Centrum Research Estimates; ^Bloomberg estimates, *follows December year ending; NA: Not Applicable

Petronet LNG

Quarterly financials, operating metrics and key performance indicators

Exhibit 6: Quarterly Financials
Particulars (Rsmn)
Net Sales
Other operating income
Raw material consumption
Staff cost
Forex gain/loss
Other operating expenses
Total operating expenses
EBITDA
Depreciation
Interest
Other Income
PBT
Tax
RPAT
YoY Growth (%)
Net Sales
EBITDA
PAT
Margins (%)
EBITDA
RPAT
Key operational parameters:
Capacity utilization Dahej (%)
Capacity utilization Kochi (%)
Total Volume (TBTU)
Long term volume Dahej (TBTU)
Spot volume Dahej (TBTU)
Tolling volume Dahej (TBTU)
Spot volume - Kochi(TBTU)
Tolling volume - Kochi(TBTU)
Applicable regas charges at Dahej (Rs/TBTU)
Applicable regas charges at Kochi (Rs/TBTU)
Trading/Marketing margin (USD/TBTU)

Q2FY15

Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

1,08,605
1,194
1,03,486
110
1,014
1,04,609
5,190
774
799
351
3,968
1,340
2,628

1,10,903
1,082
1,07,272
122
1,184
1,08,577
3,408
793
685
268
2,199
575
1,624

70,773
844
68,356
218
829
69,403
2,214
817
667
576
1,306
(1,701)
3,007

82,251
1,521
79,080
150
931
80,161
3,611
801
612
333
2,531
56
2,475

72,505
2,945
69,585
144
1,053
70,781
4,668
808
612
360
3,608
1,120
2,488

48,219
3,242
47,165
229
908
48,302
3,158
807
588
584
2,348
564
1,784

59,501
1,152
54,927
194
1,066
56,187
4,466
800
576
427
3,517
1,124
2,393

51,090
2,284
45,768
183
998
46,948
6,425
806
556
494
5,556
1,777
3,779

14.9
42.6
44.6

19.1
(2.6)
19.8

(32.0)
(42.8)
77.6

(18.3)
0.9
58.0

(33.2)
(10.1)
(5.3)

(56.5)
(7.3)
9.9

(15.9)
101.7
(20.4)

(29.5)
37.6
51.8

4.8
2.4

3.1
1.5

3.1
4.2

4.4
3.0

6.4
3.4

6.5
3.7

7.5
4.0

12.6
7.4

117
2
150
94
24
31
1.3
0
39
65
0.1

110
2
141
94
18
28
1.0
0
39
65
(0.3)

73
15
104
60
12
21
2
7
41
68
(0.2)

98
10
132
67
23
35
2.5
3.6
41
68
(0.3)

121
4
157
63
19
72
3
41
68
(0.1)

108
7
142
38
21
80
4
41
68
(0.1)

117
8
154
109
13
26
5
43
72
(0.4)

130
5
168
105
10
50
3
43
72
0.05

Source: Company, Centrum Research

Exhibit 7: Key Performance Indicators

Assumptions
Nameplate capacity (MMTPA)
Overall Capacity utilization (%)
Volumes at Dahej (MMTPA)
Volumes at Kochi (MMTPA)
Regas charges at Dahej (Rs/MMBTU)*
Regas charges at Kochi (Rs/MMBTU)*
Annual escalation in regas charges at Dahej (%)
Annual escalation in regas charges at Kochi (%)
Marketing/Trading margin (USD/MMBTU)

FY14

FY15

FY16

FY17E

FY18E

15
65
9.7
0.1
36.8
62
5
NA
0.08

15
70
10.2
0.2
38.6
65.1
5
5
(0.16)

15
76
11.1
0.4
40.5
68.4
5
5
(0.18)

20
63
12.1
0.5
42.6
71.8
5
5
(0.1)

20
62
14.0
1.5
44.7
75.4
5
5
(0.1)

Source: Company, Centrum Research Estimates, *on CY basis

Petronet LNG

Financials
Exhibit 8: Income Statement
Y/E March (Rsmn)
Revenues
COGS
% of revenues
Operating expenses
% of revenues
Employee Costs
% of revenues
EBITDA
EBITDA Margin (%)
Depreciation & Amortisation
EBIT
Interest expenses
Other Income
Exceptional item
PBT
Provision for tax
Effective tax rate (%)
Net Profit
Min. int./ share from asso.
Rep. PAT
Adj. PAT after excp.

Exhibit 10: Balance Sheet

FY14

FY15

FY16

FY17E

FY18E

3,77,476
3,58,424
95.0
3,601
1.0
466
0.1
14,984
4.0
3,081
11,903
2,196
837
10,545
3,426
32.5
7,119
7,119
7,119

3,95,010
3,76,109
95.2
3,940
1.0
571
0.1
14,390
3.7
3,154
11,236
2,935
1,548
9,849
1,024
10.4
8,825
8,825
8,825

2,71,334
2,50,757
92.4
3,958
1.5
717
0.3
15,903
6.1
3,216
12,687
2,387
1,704
12,004
2,864
23.9
9,140
9,140
9,140

2,56,029
2,27,862
89.0
6,331
2.5
793
0.3
21,043
8.3
4,343
16,699
2,851
1,547
15,396
4,003
26.0
11,393
11,393
11,393

3,03,180
2,62,064
86.4
7,782
2.6
992
0.3
32,342
11.0
5,749
26,593
2,486
1,547
25,654
6,927
27.0
18,728
18,728
18,728

FY14

FY15

FY16

FY17E

FY18E

20.0
(18.7)
(38.1)

4.6
(4.0)
24.0

(31.3)
10.5
3.6

(5.6)
32.3
24.6

18.4
53.7
64.4

4.0
3.2
2.8
1.9

3.7
2.9
2.5
2.3

6.1
4.8
4.6
3.5

8.3
6.6
6.1
4.5

11.0
9.0
8.7
6.3

14.9
10.6
11.8

16.5
9.8
9.0

15.2
10.4
12.2

16.7
11.7
11.6

23.4
15.9
16.2

9.3
19.6
28.2
2.1

8.2
12.5
13.2
8.1

3.4
13.7
30.2
(14.1)

9.1
20.8
26.3
3.3

9.1
20.8
25.6
4.0

0.6
0.4
1.5
5.8

0.5
0.4
1.6
4.4

0.4
0.0
1.4
6.0

0.5
0.3
1.5
6.4

0.3
0.2
1.5
11.3

2.5
26.3
0.7

2.0
17.0
0.6

2.5
20.5
0.7

2.5
16.5
0.7

5.0
20.0
1.4

9.5
9.5
9.5
13.6
66.5

11.8
11.8
11.8
16.0
75.8

12.2
12.2
12.2
16.5
85.0

15.2
15.2
15.2
21.0
97.2

25.0
25.0
25.0
32.6
116.1

37.2
5.3
19.0
0.8
0.7

30.0
4.7
19.9
0.7
0.7

29.0
4.2
16.7
1.0
1.0

23.3
3.6
13.8
1.1
1.0

14.2
3.0
8.8
1.0
0.9

Source: Company, Centrum Research Estimates

Exhibit 9: Key Ratios

Y/E March
Growth Metrics (%)
Revenues
EBITDA
Rep. Profit
Profitability Metrics (%)
EBITDA Margin
PBIT Margin
PBT Margin
PAT Margin
Return Ratio (%)
ROE
ROCE
ROIC
Turnover Ratio (days)
Inventory period
Debtors period
Creditors period
Net working capital
Solvency Ratio (x)
Debt-equity
Net debt-equity
Current Ratio
Interest coverage
Dividend
Dividend per share
Dividend payout ratio (%)
Dividend yield (%)
Per share (Rs)
Basic EPS
Fully diluted EPS - Adjusted
Fully diluted EPS - Reported
CEPS
Book value
Valuation (x)
P/E
P/BV
EV/EBITDA
EV/Sales
Mcap/Sales

Y/E March (Rsmn)

Equity Share Capital
Share Ap. Money Pend. Allot.
Reserves
Shareholders' fund
Debt
Minority Interest
Deferred Tax/non current
Liability
Total Capital Employed
Gross fixed assets
Accumulated depreciation
CWIP
Net Fixed Assets
Investments
Inventories
Sundry Debtors
Cash & bank balances
Loans and advances
Other current assets
Total current assets
Current liabilities & prov.
Net current assets
Deferred Tax Asset/Others
Total Assets

FY14

FY15

FY16

FY17E

FY18E

7,500
42,362
49,862
31,964
-

7,500
49,386
56,886
26,000
-

7,500
56,264
63,764
23,738
-

7,500
65,395
72,895
33,192
-

7,500
79,599
87,099
27,980
-

5,530

7,270

8,710

8,710

8,710

87,356
77,946
(15,296)
8,799
71,449
1,399
9,557
20,157
12,327
4,098
140
46,278
31,771
14,507
0
87,356

90,156
87,869
(18,444)
7,469
76,894
900
8,826
13,428
3,641
7,493
4
33,392
21,030
12,362
0
90,156

96,213
89,754
(21,648)
15,505
83,610
900
2,461
9,885
21,829
5,762
33
39,970
28,267
11,703
0
96,213

1,14,797
1,21,754
(25,992)
8,527
1,04,289
900
6,314
14,396
7,335
2,273
76
30,394
20,786
9,608
0
1,14,797

1,23,789
1,21,754
(31,741)
21,940
1,11,953
900
7,376
16,818
7,690
2,655
89
34,628
23,692
10,935
0
1,23,789

Source: Company, Centrum Research Estimates

Exhibit 11: Cash Flow

Y/E March (Rsmn)
PBT
Total tax paid
Depreciation
Chg in debtors
Chg in inventory
Chg in loans & advances
Change in other current
assets
Chg in creditors
Chg in other current liabilities
Change in other non-current
liabilities
Net chg in working capital
CF from op. activities (a)
Capital expenditure
Chg in investments
CF from invest. activities (b)
Debt raised/(repaid)
Dividend (incl. tax)
Others
CF from fin. activities (c)
Net chg in cash (a+b+c)

FY14

FY15

FY16

FY17E

FY18E

10,545
(1,806)
3,081
(3,259)
809
(1,528)

9,849
716
3,154
6,729
731
(3,396)

12,004
(1,424)
3,216
3,542
6,365
1,731

15,396
(4,003)
4,343
(4,511)
(3,853)
3,489

25,654
(6,927)
5,749
(2,422)
(1,062)
(382)

(114)

136

(29)

(43)

(13)

(3,897)
425

(14,940)
4,195

7,619
(395)

(3,537)
(3,964)

2,469
425

13

20

13

(7,559)
4,261
(7,644)
(7,644)
4,782
(2,194)
438
3,026
(357)

(6,541)
7,178
(8,593)
499
(8,094)
(5,964)
(1,755)
(52)
(7,771)
(8,687)

18,847
32,643
(9,921)
(9,921)
(2,262)
(2,262)
(11)
(4,535)
18,188

(12,399)
3,337
(25,022)
(25,022)
9,454
(2,262)
7,192
(14,494)

(972)
23,504
(13,413)
(13,413)
(5,213)
(4,524)
(9,737)
355

Source: Company, Centrum Research Estimates

Source: Company, Centrum Research Estimates

Petronet LNG

Appendix A
Disclaimer
Centrum Broking Limited (Centrum) is a full-service, Stock Broking Company and a member of The Stock Exchange, Mumbai (BSE) and National Stock
Exchange of India Ltd. (NSE). Our holding company, Centrum Capital Ltd, is an investment banker and an underwriter of securities. As a group Centrum
has Investment Banking, Advisory and other business relationships with a significant percentage of the companies covered by our Research Group. Our
research professionals provide important inputs into the Group's Investment Banking and other business selection processes.
Recipients of this report should assume that our Group is seeking or may seek or will seek Investment Banking, advisory, project finance or other
businesses and may receive commission, brokerage, fees or other compensation from the company or companies that are the subject of this
material/report. Our Company and Group companies and their officers, directors and employees, including the analysts and others involved in the
preparation or issuance of this material and their dependants, may on the date of this report or from, time to time have "long" or "short" positions in, act
as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. Centrum or its affiliates do not own 1% or more in the
equity of this company Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to
our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make
investment decisions that are inconsistent with the recommendations expressed herein. We may have earlier issued or may issue in future reports on the
companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you
should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. We and our Group may rely on
information barriers, such as "Chinese Walls" to control the flow of information contained in one or more areas within us, or other areas, units, groups or
affiliates of Centrum. Centrum or its affiliates do not make a market in the security of the company for which this report or any report was written.
Further, Centrum or its affiliates did not make a market in the subject companys securities at the time that the research report was published.
This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of an offer to buy,
purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection
with any contract or commitment whatsoever. This document does not solicit any action based on the material contained herein. It is for the general
information of the clients of Centrum. Though disseminated to clients simultaneously, not all clients may receive this report at the same time. Centrum
will not treat recipients as clients by virtue of their receiving this report. It does not constitute a personal recommendation or take into account the
particular investment objectives, financial situations, or needs of individual clients. Similarly, this document does not have regard to the specific
investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities
discussed in this report may not be suitable for all investors. The securities described herein may not be eligible for sale in all jurisdictions or to all
categories of investors. The countries in which the companies mentioned in this report are organized may have restrictions on investments, voting rights
or dealings in securities by nationals of other countries. The appropriateness of a particular investment or strategy will depend on an investor's
individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for
his/ her/their particular circumstances and, if necessary, seek professional/financial advice. Any such person shall be responsible for conducting
his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved
in the securities forming the subject matter of this document.
The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant
uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates
on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase
over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company.
These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accented accounting
principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not
regard the inclusion of the projections and forecasts described herein as a representation or warranty by or on behalf of the Company, Centrum, the
authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you
should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the
assumptions underlying such projections and forecasts.
The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may
realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital
may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to
change without notice. Centrum does not provide tax advice to its clients, and all investors are strongly advised to consult regarding any potential
investment. Centrum and its affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Foreign currencies
denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from
the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies effectively assume currency risk.
Certain transactions including those involving futures, options, and other derivatives as well as non-investment-grade securities give rise to substantial
risk and are not suitable for all investors. Please ensure that you have read and understood the current risk disclosure documents before entering into any
derivative transactions.
This report/document has been prepared by Centrum, based upon information available to the public and sources, believed to be reliable. No
representation or warranty, express or implied is made that it is accurate or complete. Centrum has reviewed the report and, in so far as it includes
current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. The opinions expressed in
this document/material are subject to change without notice and have no obligation to tell you when opinions or information in this report change.
This report or recommendations or information contained herein do/does not constitute or purport to constitute investment advice in publicly accessible
media and should not be reproduced, transmitted or published by the recipient. The report is for the use and consumption of the recipient only. This
publication may not be distributed to the public used by the public media without the express written consent of Centrum. This report or any portion
hereof may not be printed, sold or distributed without the written consent of Centrum.
The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform
themselves about, and observe, any such restrictions. Neither Centrum nor its directors, employees, agents or representatives shall be liable for any
damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with
the use of the information.
This document does not constitute an offer or invitation to subscribe for or purchase or deal in any securities and neither this document nor anything
contained herein shall form the basis of any contract or commitment whatsoever. This document is strictly confidential and is being furnished to you
solely for your information, may not be distributed to the press or other media and may not be reproduced or redistributed to any other person. The
distribution of this report in other jurisdictions may be restricted by law and persons into whose possession this report comes should inform themselves
about, and observe any such restrictions. By accepting this report, you agree to be bound by the fore going limitations. No representation is made that
this report is accurate or complete.

Petronet LNG

The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of Centrum Broking
and are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this
report and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection.
This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its
directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its
directors or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or
any other person accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection
therewith.
Centrum and its affiliates have not managed or co-managed a public offering for the subject company in the preceding twelve months. Centrum and
affiliates have not received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this
report for service in respect of public offerings, corporate finance, debt restructuring, investment banking or other advisory services in a
merger/acquisition or some other sort of specific transaction.
As per the declarations given by them, Mr Sachin Mehta, research analyst and and/or any of his family members do not serve as an officer, director or any
way connected to the company/companies mentioned in this report. Further, as declared by him, he has not received any compensation from the above
companies in the preceding twelve months. He does not hold any shares by him or through his relatives or in case if holds the shares then will not to do
any transactions in the said scrip for 30 days from the date of release such report. Our entire research professionals are our employees and are paid a
salary. They do not have any other material conflict of interest of the research analyst or member of which the research analyst knows of has reason to
know at the time of publication of the research report or at the time of the public appearance.
While we would endeavour to update the information herein on a reasonable basis, Centrum, its associated companies, their directors and employees are
under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent Centrum
from doing so.
Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable
regulations and/or Centrum policies, in circumstances where Centrum is acting in an advisory capacity to this company, or any certain other
circumstances.
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject
Centrum Broking Limited or its group companies to any registration or licensing requirement within such jurisdiction. Specifically, this document does
not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any
transaction to any U.S. person unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this
document may be distributed in Canada or used by private customers in United Kingdom.
The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading,
dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read Risk
Disclosure Document for Capital Market and Derivatives Segments as prescribed by Securities and Exchange Board of India before investing in Indian
Securities Market.

Petronet LNG price chart

400
350
300
250
200
150
100
50
Sep-13

Mar-14

Sep-14

Mar-15

Sep-15

Mar-16

Aug-16

Petronet LNG Ltd

Source: Bloomberg, Centrum Research

Petronet LNG

Disclosure of Interest Statement

1

Business activities of Centrum Broking Limited

(CBL)

Centrum Broking Limited (hereinafter referred to as CBL) is a registered member of NSE (Cash, F&O
and Currency Derivatives Segments), MCX-SX (Currency Derivatives Segment) and BSE (Cash
segment), Depository Participant of CDSL and a SEBI registered Portfolio Manager.

Details of Disciplinary History of CBL

CBL has not been debarred/ suspended by SEBI or any other regulatory authority from accessing
/dealing in securities market.

Registration status of CBL:

CBL is registered with SEBI as a Research Analyst (SEBI Registration No. INH000001469)

Petronet LNG

GAIL India

GSPL

Whether Research analysts or relatives have any financial interest in the subject company and
nature of such financial interest

No

No

No

Whether Research analyst or relatives have actual / beneficial ownership of 1% or more in

securities of the subject company at the end of the month immediately preceding the date of
publication of the document.

No

No

No

No

No

No

Whether the research analyst or his relatives has any other material conflict of interest

Whether research analyst has received any compensation from the subject company in the past
12 months and nature of products / services for which such compensation is received

No

No

No

Whether the Research Analyst has received any compensation or any other benefits from the
subject company or third party in connection with the research report

No

No

No

Whether Research Analysts has served as an officer, directoror employee of the subject company

No

No

No

10

Whether the Research Analyst has been engaged in market making activity of the subject
company.

No

No

No

Rating Criteria

Rating
Buy
Hold
Sell

Market cap < Rs20bn

Upside > 20%
Upside between -20% to +20%
Downside > 20%

Market cap > Rs20bn but < 100bn

Upside > 15%
Upside between -15% to +15%
Downside > 15%

Market cap > Rs100bn

Upside > 10%
Upside between -10% to +10%
Downside > 10%

Member (NSE and BSE)

Regn No.:
CAPITAL MARKET SEBI REGN. NO.: BSE: INB011454239
CAPITAL MARKET SEBI REGN. NO.: NSE: INB231454233
DERIVATIVES SEBI REGN. NO.: NSE: INF231454233
(TRADING & CLEARING MEMBER)
CURRENCY DERIVATIVES: MCX-SX INE261454230
CURRENCY DERIVATIVES:NSE (TM & SCM) NSE 231454233
Depository Participant (DP)
CDSL DP ID: 120 12200
SEBI REGD NO. : CDSL : IN-DP-CDSL-661-2012
PORTFOLIO MANAGER
SEBI REGN NO.: INP000004383
Website: www.centrum.co.in
Investor Grievance Email ID: investor.grievances@centrum.co.in
Compliance Officer Details:
KavitaRavichandran
(022) 4215 9842; Email ID: compliance@centrum.co.in

Centrum Broking Ltd. (CIN :U67120MH1994PLC078125)

Registered Office Address

Corporate Office & Correspondence Address

Bombay Mutual Building ,

Centrum House

2nd Floor,

6th Floor, CST Road, Near VidyaNagari Marg, Kalina,

Dr. D. N. Road,
Fort, Mumbai - 400 001

Santacruz (E), Mumbai 400 098.

Tel: (022) 4215 9000

Petronet LNG