Petronet LNG Limited

Petronet LNG reported a robust operational quarter with overall LNG volume processed at 233 TBTU, marking a 2% growth over both the previous and corresponding quarters. The Dahej terminal's throughput increased to 214 TBTU, with its capacity utilization improving to 94% from 92% QoQ. Notably, the Kochi terminal achieved its highest ever capacity utilization of 29% during the quarter, indicating strong demand and operational efficiency.

The company delivered strong financial performance, with Profit Before Tax (PBT) reaching INR 1,144 crores, a 6% increase from the previous quarter's INR 1,083 crores. Profit After Tax (PAT) also grew by 5% QoQ to INR 848 crores. Service income for the quarter stood at INR 865 crores, complemented by an inventory gain of INR 27 crores, contributing to the overall profitability.

The Dahej terminal's capacity expansion to 22.5 MMTPA is on track for mechanical completion by March 31, 2026. Management highlighted Dahej's significant competitive advantages, including its superior evacuation capacity of 35 MMTPA (for a current 17.5 MMTPA capacity), low operating costs, and extensive storage capacity with 8 tanks. These factors provide flexibility and an edge over competing terminals, attracting customers for the expanded capacity.

The Kochi terminal achieved its highest ever capacity utilization of 29%, primarily driven by softened LNG prices and increased offtake from existing customers such as MRPL, OMPL, and Kochi refinery. Further boosting its prospects, the crucial Kochi-Bangalore pipeline connectivity is expected to be established by June 2026, which will significantly enhance the terminal's market reach and utilization.

Petronet LNG has outlined substantial capital expenditure plans, targeting approximately INR 3,000 crores for FY26 and a significant INR 9,000 crores for FY27. A major portion of the FY27 capex, around INR 7,500 crores, is earmarked for petrochemical projects, which have an approved total capex of INR 20,685 crores. Additionally, the Gopalpur terminal project, with a total scheme capex of INR 6,000 crores, is awaiting environmental clearance before construction can begin.

The company anticipates a favorable market environment with LNG prices expected to soften over the next 5-7 years due to new liquefaction facilities globally. This, combined with India's projected economic growth, is expected to more than double the country's gas demand in the same timeframe. Despite the large capex, management affirmed its commitment to maintaining a healthy dividend payout in the 40-50% range, supported by strong cash balances.

Management confirmed that INR 49 crores in Use-or-Pay (UOP) charges for CY25 are still due. For CY22 dues, settlement is expected by March 2026, as bank guarantees are valid until then. While a regasification agreement was signed with ONGC, commercial terms for this and other new petchem contracts were not disclosed, with management citing their sensitive nature.