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Utilisation at Dahej terminal elevated to a strong 109% from 81% in Q1FY21 reflecting a powerful rebound in LNG demand, partly aided by decrease price of long-term in addition to spot LNG within the quarter.

PLNG delivered a powerful efficiency in Q2FY21 pushed by a fast rebound in volumes and better blended gross margins partly resulting from adventitious positive aspects; larger dividend payout was comforting. The mgmt assuaged issues on its non-binding MoU with Tellurian, whereas indicating that availability of a number of low-priced long-term LNG contracts now obviates the necessity for fairness funding to lock in volumes. We reiterate Purchase with FV of Rs 300.

Increased-than-anticipated restoration in volumes and better blended margins
Ebitda elevated 17% y-o-y and 50% q-o-q to Rs 13.6 bn in Q2FY21, 18% above our estimate, reflecting (i) 2% y-o-y and 34% q-o-q improve in volumes to 254 tn BTUs; and (ii) a pointy soar in blended gross margins, which included Rs 700 mn of adventitious positive aspects and better buying and selling margins led by restoration in spot LNG costs. Adjusted internet earnings elevated 18% y-o-y and 78% q-o-q to Rs 9.Three bn (EPS of Rs 6.2), 30% above our estimate, additional boosted by a pointy soar in different earnings.

Utilisation at Dahej terminal elevated to a strong 109% from 81% in Q1FY21 reflecting a powerful rebound in LNG demand, partly aided by decrease price of long-term in addition to spot LNG within the quarter.

Wholesome efficiency in H1FY21 regardless of decrease volumes
In H1FY21, Ebitda elevated 4% y-o-y to Rs 22.7 bn as 7% decline in volumes resulting from lockdown in Q1FY21 was offset by larger blended gross margins and decrease working prices. Adjusted internet earnings elevated 8% to Rs 14.5 bn (EPS of Rs 9.7) boosted by larger different earnings and decrease curiosity price. PLNG elevated its particular dividend to Rs 8/share now from Rs 5.5 declared within the earlier yr, elevating payout to 83% of H1FY21 EPS.

Surplus LNG availability obviates the necessity for fairness funding
The corporate indicated that there was no progress on discussions pertaining to non-binding MoU with Tellurian, which is because of expire subsequent month—a number of low-priced long-term sourcing contracts are available within the present oversupplied international LNG market and therefore, PLNG is probably not required to pursue any fairness investments to lock in LNG volumes. The mgmt remained optimistic on its efforts to obtain long-term LNG linked to JKM spot LNG costs.

Elevate FY2021e EPS by 7%; reiterate BUY
We elevate our FY2021e EPS by 7% factoring in (i) modestly larger volumes; (ii) larger spot LNG margins; and (iii) different minor modifications. We reiterate Purchase score noting (i) wholesome 10-11% CAGR in EPS over the following 3-5 years; (ii) enticing valuation at 11X FY2022e EPS; and (iii) excessive FCF/dividend yield of 6-7% pending closing selections on giant funding proposals, which can take time to fructify.

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