Petronet LNG Limited

Petronet LNG reported a net profit of INR805.75 crores for Q2 FY26, marking a 5% year-on-year decline. Revenue from operations stood at INR11,009 crores, a 15% decrease compared to the previous year. EBITDA for the quarter was INR1,117 crores, achieving a margin of approximately 10%. The company also declared an interim dividend of Rs.7 per share, reinforcing its commitment to shareholder returns.

The Kochi terminal achieved its highest-ever capacity utilization at 27% in Q2 FY26, primarily driven by increased cargoes from BPCL's Kochi refinery. Management anticipates this positive trend to continue. Furthermore, the company expects the Kochi-Bangalore pipeline to be connected to the natural gas grid within the current financial year, which is projected to significantly improve Kochi's utilization and overall connectivity.

The Dahej terminal processed 211 TBTU during the quarter. The ongoing expansion activities at Dahej are progressing, with an additional 5 MMTPA capacity expected to be added by March 2026. Despite some delays attributed to monsoon and 'Operation Sindoor', the company is actively working with various entities to secure commitments for the expanded infrastructure, with major contracts, including one with ExxonMobil, already in place.

Progress on the Gopalpur terminal involves land acquisition and a strategic shift from an FSRU to a land-based terminal. This change necessitated resubmission of the Environmental Clearance (EC), which is currently under process. Management expects EC clearance soon, after which the project is estimated to take approximately three years to complete. The terminal is projected to start with an initial run rate of 0.5 million tons per annum, scaling up to 1.2 million tons from March/April next year.

Petronet LNG has guided for a total capital expenditure of approximately INR5,000 crores for FY26. The major portion of this capex is allocated to the petrochemical project, with significant investments also planned for the Gopalpur terminal and Jetty. In the first half of FY26, the company spent INR525 crores, with over INR600 crores specifically on the petchem plant till date. The second half of FY26 is expected to see a major chunk of the capex as key packages are awarded and work progresses.

The company acknowledges the government's ambition to increase natural gas's share in India's energy basket to 15%. While this target is ambitious, management is hopeful of reaching 10-11% from the current 7% level. They anticipate a decent supply of LNG by late 2027/early 2028, which could lead to softer spot prices and increased affordability, thereby boosting terminal utilization. Key sectors expected to drive this growth include petrochemicals, refining, power, fertilizer, mining equipment, LNG as transport fuel, and City Gas Distribution (CGD), with CGD identified as a leading growth driver.

Management clarified that PNGRB notifications regarding regasification tariffs are under challenge and pertain to registration rather than direct tariff impact^🌐, thus posing no commercial constraint on PLL. The company reported a net negative impact of INR45 crores at the PBT level due to Ind AS adjustments, which included a notional forex loss of INR84 crores arising from USD-denominated lease liabilities for Qatar Gas vessels. However, this forex impact is naturally hedged as these costs are passed through to offtakers.

Petronet LNG expressed confidence in recovering use or pay dues, citing existing settlement agreements and a track record of recovery. Specifically, INR694 crores from CY22 are expected to be collected this year. Regarding regasification contracts, the existing agreement is valid until April 2028, with new contracts set to commence immediately thereafter, ensuring continuity of operations.