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    Petronet LNG Limited

    PETRONET
    Oil, Gas & Consumable Fuels·28 Jul 2025
    Management Summary

    Petronet LNG reported a mixed Q1 FY26 with a decline in PBT and PAT both sequentially and year-on-year, despite a 7.31% sequential growth in overall processed volumes to 220 TBTU. A significant positive was the net worth crossing INR20,000 crores. The company also announced a substantial INR6,355 crore investment for a new 5 MMTPA LNG terminal at Gopalpur Port and secured a new long-term agreement with Deepak Fertilisers. Management highlighted stable LNG prices and efficient operations contributing to sequential volume growth, while acknowledging lower demand from power and fertilizer sectors compared to Q1 FY25.

    Highlights

    5
    • Net worth reached INR20,233 crores as of June 30, 2025, up 4.39% QoQ from INR19,382 crores.

    • Overall volume processed increased 7.31% QoQ to 220 TBTU from 205 TBTU.

    • Dahej terminal processed 207 TBTU, a 9.52% QoQ growth from 189 TBTU.

    • Board approved INR6,355 crores investment for a 5 MMTPA land-based LNG terminal at Gopalpur Port.

    • Signed a new agreement with Deepak Fertilisers for 26 TBTU (approx 1.1 million tons) of LNG starting May-July 2026.

    Concerns

    5
    • Profit Before Tax (PBT) declined 21.44% QoQ to INR1,136 crores from INR1,446 crores.

    • Profit After Tax (PAT) declined 20.46% QoQ to INR851 crores from INR1,070 crores.

    • Overall volume processed declined 16.03% YoY to 220 TBTU from 262 TBTU in Q1 FY25.

    • Lower demand from power and fertilizer sectors compared to Q1 FY25 impacted volumes.

    • Kochi terminal utilization remains low, with a slight decline this quarter due to a FACT shutdown.

    What Changed2

    vs Q2 FY26

    Guidance items8 → 16 (+8)Risks discussed4 → 6 (+2)

    Key financials

    Single quarter

    06 metrics
    1. 01Profit Before Tax₹1,136 Cr-25.4%YoY
    2. 02PAT₹851 Cr-25.5%YoY
    3. 03Net Worth₹20,233 Cr+4.4%QoQ
    4. 04Overall Volume Processed220 TBTU-16.0%YoY
    5. 05Dahej Terminal Volume207 TBTU-16.5%YoY

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹500 crores this quarter · ₹5,000 crores (FY26) planned

    Debt

    Debt disclosed

    Guidance & targets

    16
    CategoryTargetPriority
    Capacity
    Gopalpur LNG Terminal Capacity
    5 MMTPA
    High
    Capacity
    Dahej Enhanced Capacity Stability
    stable enhanced capacity terminal working
    High
    Project Timeline
    Gopalpur LNG Terminal Completion
    approximately 3 years
    High
    Project Timeline
    Dahej Expansion Completion & Commissioning
    by end of this calendar year
    High
    Project Timeline
    Dahej Third Jetty Completion
    2027
    High
    Utilization
    Gopalpur LNG Terminal Initial Utilization
    20%
    Medium
    Utilization
    Gopalpur LNG Terminal Ramp-up Utilization
    80-90%
    Medium
    Volume
    Deepak Fertilisers Agreement Volume
    26 TBTU (approx 1.1 million tons)
    High
    Volume
    Deepak Fertilisers Agreement Start Date
    May to July 2026
    High
    Volume
    Gorgon Phase 2 Volume Commencement
    0.5 MMTPA
    High
    Volume
    Gorgon Phase 2 Contract Volume
    1.2 MMTPA
    High
    Market Growth
    Gas Consumption Growth
    6% to 7%
    Medium
    Market Growth
    LNG Consumption Growth
    more than double
    Medium
    Capex
    FY26 Targeted Capex
    INR5,000 crores
    High
    Capex
    FY27 Targeted Capex
    even higher (than INR5,000 crores)
    Medium
    Capex
    Total Capex Program
    INR30,000 crores
    High

    Finalization of Qatar Extension Offtake Agreements

    Next quarter / ongoing
    CurrentDiscussions ongoing for downstream agreements with GAIL, IOCL, BPCL.
    TargetAgreements finalized and announced.

    Why it matters

    Essential for securing long-term supply and ensuring utilization of expanded capacity.

    The downstream agreements are being worked upon. We are trying to find what is the best and optimal solution to sell these volumes. So those discussions are ongoing.

    How to verify

    qa_highlights[topic='Update on Qatar extension and progress with offtakers']

    Risks & concerns

    6
    RiskSeverity

    Global LNG price volatility and geopolitical risk

    Management stated contracts are linked to stable oil prices ($65-$70) and spot prices are range-bound, with no perceived geopolitical risk.Analyst downplayed

    low

    Soft sales growth and demand from power/fertilizer sectors

    Q1 FY26 saw low demand from power and fertilizer sectors compared to Q1 FY25, impacting overall volumes, though sequential growth was positive.Analyst acknowledged

    medium

    Low utilization of Kochi terminal

    Kochi terminal utilization is low due to lack of pipeline connectivity and a FACT shutdown this quarter, but expected to improve with pipeline completion.Analyst acknowledged

    medium

    Delays in Dahej expansion project

    Slippages in regas expansion capacity due to monsoon and 'war-like situation' (security concerns) have slightly impacted construction work.Management acknowledged

    medium

    Finalization of offtake agreements for Qatar extension

    Downstream agreements with GAIL, IOCL, BPCL for Qatar extension volumes are still being worked upon.Analyst acknowledged

    medium

    Competition for Gopalpur terminal

    Management is not concerned about competition for the new Gopalpur terminal, citing PLL's experience, swapping capabilities, and pipeline hydraulics advantages.Analyst downplayed

    low

    Q&A highlights

    8

    “So of course, our contracts are linked to oil prices. So oil prices have not been very volatile. In fact, they have been subdued. So they are holding in the range of $65 to $70. So we don't see any risk or any challenge from the geopolitical side.”

    Addresses a key macro concern for the sector, providing reassurance on price stability for long-term contracts.

    asked by Param Vora

    3 min read6 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance Overview

    Petronet LNG reported a decline in profitability for Q1 FY26, with Profit Before Tax (PBT) at INR1,136 crores, down 21.44% sequentially from INR1,446 crores and 25.39% year-on-year from INR1,520 crores in Q1 FY25. Similarly, Profit After Tax (PAT) stood at INR851 crores, a 20.46% sequential decrease from INR1,070 crores and a 25.48% year-on-year decline from INR1,142 crores. Despite the profit contraction, the company's net worth surpassed INR20,000 crores, reaching INR20,233 crores as of June 30, 2025, representing a 4.39% sequential growth.

    02

    Operational Volumes and Demand Dynamics

    Overall volume processed during Q1 FY26 was 220 TBTU, marking a 7.31% sequential increase from 205 TBTU in the previous quarter, but a 16.03% year-on-year decrease from 262 TBTU in Q1 FY25. The flagship Dahej terminal processed 207 TBTU, growing 9.52% sequentially from 189 TBTU. Management attributed the sequential improvement to stable LNG prices, efficient operations, and higher capacity utilization, while noting lower demand from the power and fertilizer sectors compared to Q1 FY25 as a reason for the year-on-year decline.

    03

    Strategic Capacity Expansion at Gopalpur Port

    The Board of Directors has approved an enhanced investment of INR6,355 crores for establishing a new 5 MMTPA land-based LNG terminal at Gopalpur Port, Odisha. This marks Petronet LNG's first greenfield LNG project on India's East Coast, transitioning from an earlier 4 MMTPA FSRU-based plan. The project is targeted for completion in approximately 3 years from the date of environmental clearance, which is expected in a couple of months. The company anticipates starting with 20% utilization and ramping up to 80-90% by CY28-29.

    04

    New Long-Term Offtake Agreements and Supply Updates

    Petronet LNG secured a new agreement with Deepak Fertilisers for approximately 26 TBTU (1.1 million tons) of LNG, with a minimum volume of 0.5 million tons, commencing between May to July 2026. The pricing for this agreement is consistent with existing long-term contracts, and there is potential for an additional 20% volume. Additionally, the Gorgon Phase 2 volume, a 1.2 MMTPA contract, is expected to commence towards the end of FY26, with an initial volume of 0.5 MMTPA for two years before ramping up.

    05

    Dahej and Kochi Terminal Updates

    The expansion of the Dahej terminal from 17.5 MMTPA to 22.5 MMTPA is progressing, with jetty construction on schedule. While some slippages occurred in regas expansion due to monsoon and security concerns, management expects construction to complete and commissioning to start by the end of this calendar year, with stable enhanced capacity by Q1 of next calendar year. The third jetty is targeted for completion in 2027. Kochi terminal's utilization remains low, but is expected to improve significantly once pipeline connectivity, being laid by GAIL, is established by the end of this calendar year or FY26.

    06

    Capital Expenditure and Financing Plans

    The company has outlined a substantial capex program totaling around INR30,000 crores, with the lion's share allocated to the petchem plant. For FY26, the targeted capex is approximately INR5,000 crores, which includes INR300 crores for the Gopalpur terminal, INR100 crores for a corporate office, and INR100 crores for 25 CBG plants. To finance this extensive program, Petronet LNG has issued a request for proposal for a rupee term loan of INR12,000 crores. The petchem project has already seen an expenditure of INR500 crores this quarter, which is the cumulative spend to date.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.