Petronet LNG slips into red

Petronet LNG leads the losers today morning on the BSE, down over 2% at Rs.190.95, its current intra day low. And to think that three days ago, the stock had actually hit a new 52-week high at Rs.204.

The stock has slipped into the red today after several reports from analysts stated that the company could be looking at huge losses due to continuing poor capacity utilizations at Kochi terminal on account of unfinished work on laying pipelines to transport the gas imported at its Kochi terminal. Nomura Securities has stated that the company could be looking at losses to the tune of around Rs.400-500 crore per annum.

For Q1FY15, the company posted a 30% (YoY) decline in net profit at Rs.157 crore and this was mainly on the back of higher interest outgo, which rose by a whopping 225% to Rs.78 crore. This rise in interest charges was on account of capitalizing the books of accounts of its Kochi LNG terminal. Lower margins ar Dahej terminal also added to the woes. Like has been the trend for a few quarters now, the company has blamed this poor show on lower capacity utilization - the 5-million-tonne-a-year Kochi terminal is operating at just 1% of capacity and only 0.66 trillion British thermal units of natural gas was regasified. This was sold during current Q1 to Kochi Refinery. . But this is not a one-off problem as it neither has customers nor the pipeline to carry the fuel to Karnataka and Tamil Nadu, which is to be put up by GAIL. Till then, it is expected to be sold to a few handful local power companies and to BPCL’s Kochi plant.