State-run Petronet LNG’s Q4 FY23 results, scheduled to be released on Wednesday, are expected to be better than that in Q3 FY23

Analysts said spot LNG prices have softened to around $20-22 per million British thermal units (mBtu) in Q4 FY23, from around $35 per mBtu in previous quarters, which is expected to shore up margins.

The moderation in spot LNG prices is also expected to improve volume visibility for gas utilities. High natural gas prices impacted demand for LNG in India, particularly in sectors such as power generation, city gas distribution (CGD) and fertilisers. However, weakening LNG prices will spur demand from CGD and fertilisers, thereby, shoring up volumes.

Besides, better optimisation of operations, which continues from Q3 FY23, will also help drive up stressed margins. A critical element to be monitored would be utilisation levels at the Dahej and Kochi terminals, they added.

ICICI Securities in a January report projected that India’s largest liquefied natural gas (LNG) importer is expected to record a better performance in the January-March quarter. “Forgettable Q3 being replaced by hopeful Q4,” it added.

The brokerage said key triggers for future price performance would include factors such as the company expecting to receive some amount of the Rs 416-crore in receivables booked in FY22 under the use or pay contract, in the near term.

Also read: Petronet LNG’s net slips 4% in Q2

Besides, the 17.5 million tonnes per annum (MTPA) capacity at the Dahej terminal has been booked for 15.75 MTPA in the long term, providing visibility to long-term volumes. Also, an increase in Kochi terminal utilisation levels can support volume pick-up.

However, the LNG price trend will be a key monitorable for offtake, it added.

During Q3 FY23, Petronet reported a 3 per cent Y-o-Y growth in its consolidated net profit at Rs 1,197 crore. Consolidated total income during Q3 FY23 fell marginally to Rs 15,956 crore from Rs 16,074 crore on a Q-o-Q basis. Income was higher by 26 per cent on an annual basis.

Total volumes were at 167 trillion British thermal units (tBtu), down 9 per cent Y-o-Y but up 4.3 per cent Q-o-Q). The blended margin improved by Rs 55.4 per mBtu Q-o-Q to Rs 129.3 per mBtu.

Also read: Petronet LNG net profit declines 32% q-o-q in Q4 FY22

The company also received use or pay charges to the tune of Rs 849 crore for calendar year 2022 during Q3 FY23. Earlier charges (for FY22) of Rs 416 crore are yet to be received (which includes IOC, BPCL, etc). The management is confident that the payment would be recovered in due course, being a contractual obligation.

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