Petronet LNG Ltd. Change in Estimates:

Transcription

1 217 Equirus All rights reserved Rating Information Price (Rs) 27 Target Price (Rs) Target Date 31st Mar'19 Target Set On 9th Nov'17 Implied yrs of growth (DCF) 2 Fair Value (DCF) Fair Value (DDM) 61 Ind Benchmark BSE OIL Model Portfolio Position NA Stock Information Market Cap (Rs Mn) 32,9 Free Float (%) 5. % 52 Wk H/L (Rs) 275.2/162.9 Avg Daily Volume (1yr) 5,231,987 Avg Daily Value (Rs Mn) 1,93 Equity Cap (Rs Mn) 15, Face Value (Rs) 1 Bloomberg Code PLNG IN Ownership Recent 3M 12M Promoters 5. %. %. % DII 12.8 %.6 % -3.2 % FII 21.8 % -.4 %.1 % Public 15.4 % -.2 % 3.1 % Price % 1M 3M 12M Absolute 6.5 % 23. % 43.7 % Vs Industry 2.4 % 13.7 % 8.5 % GAIL 1. % 18.2 % 38.8 % GSPL 5.4 % 11.4 % 33.5 % Standalone Quarterly EPS forecast Rs/Share 1Q 2Q 3Q 4Q EPS (17A) EPS (18E) Petronet LNG Ltd. Absolute : REDUCE Relative : Underweight 2QFY18 Results: Estimate(), TP (), Rating () Regular Coverage 4% Downside in 17 months Best quarter, but Dahej reaching its peak volume, Downgrade to Reduce Petronet (PLNG) posted record-high quarterly volumes of 22tbtus (+16%/+15% yoy/qoq) in 2QFY18, despite India s flat yoy LNG imports during the quarter on the back of strong demand from refineries, power and fertilizers. Higher long-term volumes (+3% yoy) along with an increase in regas margins pushed up EBITDA by 24% yoy to Rs 9bn, 12% above EE. While FY18 would be strong for PLNG, Dahej would face headwinds in next two years in the form of: (1) increased domestic gas production and (2) competition from Mundra LNG amidst muted growth in LNG demand. We see Dahej volumes peaking in FY18 but expect earnings growth to be relatively muted at 7% CAGR over FY18-FY2E. Downgrade to REDUCE (from ADD) with a Mar 19 DCF-based TP of Rs (Sep 18 TP of Rs 218 earlier). LNG demand at near-peak levels: A spurt in merchant tariffs led to a significant demand uptick from power plants in September-October with LNG offtake in power increasing to ~12mmscmd from 11mmscmd (Exhibit 2). Apart from refineries, 2Q saw higher volume offtake for petchem with RIL starting its petcoke gasifier. In our view, LNG demand is hitting its near-term peak (unless the government announces a scheme for gas-based power plants) in the next 1-2 quarters, and this should reflect in flattish or lower LNG imports in the coming quarters. High domestic production, rising competition to hurt long-term volumes: A likely increase in ONGC s domestic gas production would replace LNG in fertilizer sectors (most price taker in the segment) over the next two years. This would reduce LNG demand and leave off-takers with some unsold long-term volumes. Also, commissioning of the Mundra LNG terminal by Mar 18 should lead to some shift in volumes, restricting Dahej volume growth in FY19E. Can new growth avenues provide the required boost: PLNG is in advanced stages of discussion for constructing a 7.5MTPA/2 MTPA terminal in Bangladesh/Sri Lanka. GOI is also trying to make inroads for the use of LNG as a transportation fuel for trucks. While these opportunities may provide a big boost to LNG volumes in the long term, they are unlikely to happen any time in the near future. 2Q EBITDA above estimates: Volumes grew 16% yoy to 22tbtu, coming in 1% above EE led by higher long-term and spot volumes. EBITDA was up 24% yoy to Rs 9bn primarily due to higher long-term contracts in contracted capacity and higher regas margins. The tax rate declined to 31% from 32% in 2QFY17. Reported PAT at Rs. 5.9bn was up 28% yoy on lower interest expenses and higher other income. Change in Estimates: Rs Mn Oil & Gas FY18E % Change FY19E % Change Volume % % Margin on Spot Volume % % EBITDA 34,47 6.4% 38, % PAT 21, % 24,14.3% Consolidated Financials Rs. Mn YE Mar FY17A FY18E FY19E FY2E Sales 246,16 275, , ,439 EBITDA,923 34,47 38,124 37,78 Depreciation 3,691 4,186 4,416 4,416 Interest Expense 2,97 1,66 1,2 92 Other Income 3,466 3,49 3,333 3,884 Reported PAT 17,57 21,284 24,14 24,292 Recurring PAT 17,57 21,284 24,14 24,292 Total Equity 8,939 13,338 12, ,152 Gross Debt 24,638 17,674 13,174 1,474 Cash 3,981 5,585 59,478 77,896 Rs. Mn YE Mar FY17A FY18E FY19E FY2E Earnings Book Value Dividends FCFF P/E (x) P/B (x) EV/EBITDA (x) ROE (%) 23 % 23 % 21 % 19 % Core ROIC (%) 18 % 22 % % 24 % EBITDA Margin (%) 11 % 13 % 13 % 12 % Net Margin (%) 7 % 8 % 8 % 8 % November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 1 of 13 Before reading this report, you must refer to the disclaimer on the last page.

2 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Exhibit 1: Volumes increase qoq led by higher long term and re-gas volumes Exhibit 3: Marketing margins see a sharp decline Long Term (TBTU) Spot (TBTU) Regasification (TBTU) 3 LT Regas Charge (Rs/mmbtu) Marketing Margin Exhibit 2: LNG demand sector wise; Power sector took almost ~4-5mmscmd in September. Others include refineries/petchem; rise driven by RIL petcoke gasifier Exhibit 4: Blended regasification margins improve on higher long term volumes Fertilizers Power CGD Others Blended Regas Margin (Rs/mmbtu) November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 2 of 12

3 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 FY14 FY15 FY16 FY17 FY18E FY19E FY2E PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Exhibit 5: Highest ever EBITDA/mmbtu Exhibit 7: Expect Kochi to ramp up gradually; Dahej also to work at higher utilization Cost/mmbtu EBITDA/mmbtu (RHS) Dahej Volumes Kochi Volumes Exhibit 6: Blended regas tariffs increase qoq, reflecting processing of higher long term and regas volumes Exhibit 8: EBITDA growth to moderate on high competition, lower domestic demand (Rs bn) LT Regas Charge (Rs/mmbtu) Spot LNG Price- RHS ($/mmbtu) Blended Regas (Rs/mmbtu) EBITDA PAT FY14 FY15 FY16 FY17 FY18E FY19E FY2E November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 3 of 12

4 PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Exhibit 9: Post completion of re-gas facility by end-219, Dahej nameplate facility can touch 17.5MTPA (operationally it could go to 19MTPA). 95% of capacity is sold to various off-takers and reduces earnings risk Key Con-call Highlights: Business update Torrent Power, 1 IOC, 1.5 GSPC, 2.2 BPCL, 1 Remaining,.8 GAIL, 2.5 RasGas, 8.5 During 2QFY18, PLNG recorded its highest-ever PBT at Rs 8.5bn (+26% yoy/+28% qoq) and highest-ever PAT at Rs 5.9bn (+28% yoy/+% qoq). This was mainly due to higher volumes processed at both terminals along with better efficiency in operations. Overall volumes processed were also the highest-ever at 22tbuts (+16%/+15% yoy/qoq). The company is out of MAT and so full tax is applicable. The tax rate is expected to be in range of 3-34%. Unified tariff is for the pipeline and not for the terminal. Uncertainty over its implementation at the entity level or national level remains, with PNGRB yet to make a decision. PLNG is likely to enjoy benefits of a low-cost operator if unified tariff is applicable. PLNG sales are to aggregators GAIL, IOC, BPC, and GSPC. With the Dabhol terminal shut down during monsoon, there was pressure on the Dahej terminal to meet requirements; however, with Dabhol becoming operational by Sep-end or Octbeginning, pressure on Dahej will ease to some extent. Regas service income stood at ~Rs 3.5bn in 1QFY18 and was at similar levels in 2QFY18. November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 4 of 12 To attain higher growth, PLNG is taking initiatives to develop a terminal outside India. The government has taken several positive measures to improve gas usage, and hence the company is upbeat about gas demand in the country. PLNG has three long-term contracts: two with RAS-Gas of MTPA, and one with Mobil Australia of 1.44 MTPA. PLNG is receiving all these volumes as per schedule. While there can be certain flexibilities that the company can exercise before finalizing the volumes for next year, it has to offtake at least some basic volumes. While PLNG s contracts are linked to oil prices which have surged in recent times, it has not seen any impact on long-term contracts as long-term prices are lower than spot prices currently. While LNG business from trucks has good demand potential, it has to pass through certain regulatory processes. China currently has ~3, trucks running on LNG and there are strong prospects for this market in India too. PLNG will give reasonable clarity on the potential of LNG demand from trucks next quarter when some developments in this field have taken place. The company saw power demand in the month of September after a lull in July and August. It is unsure of power demand for the current quarter. Current debt levels are Rs 2.2bn and cash balance Rs 38.2bn. Capex for FY18 would be ~ Rs 2.3bn and would stay at similar levels for FY19 also. Dahej volumes The Dahej terminal at 21tbtus operated at 11% of its average increased nameplate capacity. Its performance improved 14% qoq (184tbtus in 1QFY18) and 14% yoy (185tbuts in 2QFY17). Dahej expansion is going as per schedule and expanded capacity would be operational by 4QFY18. Gorgoan volumes 1-11tbuts of Gorgoan volumes were processed in Q1FY18 and Q2FY18 each. The negotiation process for Gorgoan volumes is on, and documentation is under discussion stages currently. Kochi terminal Kochi did its highest-ever LNG volumes i.e. 1tbtus with 15% utilization levels. Kochi utilization is improving gradually, with single-digit volumes processed last year improving to 12% in 1QFY18 and 15% in 2QFY18. A gradual improvement will be seen until Kochi-Mangalore pipeline in fully connected and operational. New terminal Discussions are fairly at advanced stages for construction of terminals in Bangladesh and Sri Lanka. No decision has been taken as yet.

5 Quarterly Results Table PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Rs Mn 2QFY18 2QFY18E 1QFY18 2QFY17 % Change 2QFY18E 1QFY18 2QFY17 Comments Net Sales 77,72 62,88 64,1 66,144 24% 21% 17% Consumption of raw materials 67,427 53,471 55,467 57,613 26% 22% 17% Employees Cost % -28% 7% Other Expenditure 1,94 1,68 1,175 1,86 2% -7% 1% Total Expenditures 68,715 54,83 56,99 58,88 % 21% 17% EBITDA 8,987 8,5 7,442 7,264 12% 21% 24% Depreciation 1,39 1,24 1, % 1% 21% EBIT 7,949 6,982 6,415 6, 14% 24% 24% Interest % % -16% Other Income 1, % 44% 11% PBT 8,53 7,329 6,658 6,765 16% 28% 26% Tax 2,616 2,419 2,282 2,17 8% 15% 21% Recurring PAT 5,888 4,91 4,376 4,596 2% % 28% Extraordinaries Reported PAT 5,888 4,91 4,376 4,596 2% % 28% EPS (Rs) % % 28% EBITDA Margin 11.6% 12.7% 11.6% 11.% -118 bps bps 58 bps EBIT Margin 1.2% 11.1% 1.% 9.7% -89 bps 26 bps 55 bps PBT Margin 1.9% 11.7% 1.3% 1.2% -73 bps 6 bps 72 bps PAT Margin 7.6% 7.8% 6.8% 6.9% -24 bps 78 bps 63 bps Tax Rate 3.8% 33.% 34.3% 32.1% -224 bps -1 bps -131 bps Volume % 15% 16% Long Term % 27% 3% Spot % 26% -72% Regas % -2% 3% Blended Regas Margin % 1% 6% November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 5 of 12

6 PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Company Snapshot How we differ from Consensus EPS Sales PAT - Equirus Consensus % Diff Comment FY18E % Increase in competition coupled with decrease in domestic demand will lead FY19E % to decline in sales. FY18E 275, ,842-7 % FY19E 286,662 3,69-14 % FY18E 21,284 19,585 9 % FY19E 24,14 22,465 7 % Our Key Investment arguments: Increase in competition to put pressure on declining domestic volumes. Current volume growth driven by expansion at Dahej; Industrial pickup and low spot LNG; Kochi low utilization till KMB pipeline commission EBITDA CAGR of 13% over FY17-2E driven by capacity expansion and increase in regas tariff. Rising domestic gas production and commencing of Mundra terminal will affect Dahej volumes. Key Forecasts: FY16 FY17E FY18E FY19E Dahej Volume (MTPA) Kochi Volume (MTPA) Blended Margin (Rs/mmbtu) Risk to Our View Weak spot LNG price and faster recovery in volume, Resolution to KMB Pipeline Key Triggers Recovery in spot LNG price Sensitivity to Key Variables % Change % Impact on EPS Regas Margin 1 % 14 % Spot Volume 1 % 3 % DCF Valuations & Assumptions Rf Beta Ke Term. Growth Debt/IC in Term. Yr 6.7 % % 3. % 3. % - FY18E FY19E FY2-22E FY23-27E FY28-37E Sales Growth 12 % 4 % 7 % 6 % 4 % NOPAT Margin 7 % 8 % 7 % 7 % 8 % IC Turnover RoIC 22.4 %.2 % 26.9 % 32.7 % 44.5 % Years of strong growth Valuation as on date (Rs) Valuation as of Mar' Based on DCF, assuming 2 years of 4% CAGR sales growth 8% NOPAT margin, we derive current fair value of Rs.212 and Mar 19 fair value of Rs.. Company Description: Petronet LNG is a joint venture between GAIL, ONGC, IOC and BPCL and engaged in regasification of LNG. PLNG operate Dahej terminal (15.MTPA capacity) and currently building Gangavaram terminal to bridge India s gas deficit. PLNG has long term contract to source LNG and has entered back-to-back contracts with off-takers. Comparable valuation Mkt Cap Price Target EPS P/E BPS P/B RoE Div Yield Company Reco. CMP Rs. Mn. Target Date FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E Petronet LNG REDUCE 27 32,9 31st Mar' % 23 % 21 % 1.9 % 1.3 % GAIL ADD 2 764, th Sep' % 1 % 11 % 1.5 % 2.3 % GSPL LONG , th Sep' % 13 % 14 %.8 %.9 % November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 6 of 12

7 PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Standalone Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18A 2Q18A 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18E FY19E FY2E Revenue 53,373 66,144 62,993 63,651 64,1 77,72 66,748 66,328 66,85 66,85 75,75 79, ,16 275, , ,439 Consumption of raw materials,768 57,613 55,569 55,22 55,467 67,427 57,187 55,2 55,2 55,2 63,398 68, ,169 2, , ,17 Employees Cost ,81 1,2 Other Expenditure 998 1,86 1,159 2,86 1,175 1,94 1,1 1,128 1,123 1,123 1,276 1, 5,33 4,531 4,873 5,362 EBITDA 6,4 7,264 6,71 6,163 7,442 8,987 8,217 9,76 9,381 9,474 1,14 9,129,923 34,47 38,124 37,78 Depreciation ,9 1,16 1,27 1,39 1,47 1,74 1,14 1,14 1,14 1,14 3,691 4,186 4,416 4,416 EBIT 5,619 6, 5,62 5,147 6,415 7,949 7,171 8,686 8,277 8,37 9,36 8, 22,232 3,221 33,78 33,292 Interest ,97 1,66 1,2 92 Other Income , , ,466 3,49 3,333 3,884 PBT 5,556 6,765 5,95 6,186 6,658 8,53 7,518 8,931 8,811 8,93 9,569 8,558 23,62 31,61,842 36,6 Tax 1,777 2,17 1,121 1,478 2,282 2,616 2,481 2,947 2,98 2,938 3,158 2,824 6,5 1,326 11,828 11,965 Recurring PAT 3,779 4,596 3,975 4,78 4,376 5,888 5,37 5,984 5,93 5,965 6,411 5,734 17,57 21,284 24,14 24,292 Extraordinary Reported PAT 3,779 4,596 3,975 4,78 4,376 5,888 5,37 5,984 5,93 5,965 6,411 5,734 17,57 21,284 24,14 24,292 EPS (Rs) Key Drivers Volume (TBTU) Regas Margin (Rs/mmbtu) Implied marketing margin on spot (Rs/mmbtu) Sequential Growth (%) Revenue -12 % 24 % -5 % 1 % 1 % 21 % -14 % -1 % % % 14 % 6 % Consumption of raw materials -17 % 26 % -4 % -1 % % 22 % -15 % -3 % % % 15 % 8 % EBITDA 29 % 13 % -16 % 2 % 21 % 21 % -9 % 19 % -4 % 1 % 7 % -1 % EBIT % 14 % -21 % 2 % % 24 % -1 % 21 % -5 % 1 % 8 % -11 % Recurring PAT 54 % 22 % -14 % 18 % -7 % % -14 % 19 % -1 % 1 % 7 % -11 % EPS 54 % 22 % -14 % 18 % -7 % % -14 % 19 % -1 % 1 % 7 % -11 % Yearly Growth (%) Revenue -36 % -12 % 22 % 5 % 21 % 17 % 6 % 4 % 3 % -15 % 12 % 2 % -9 % 12 % 4 % 1 % EBITDA 78 % 54 % 114 % 24 % 16 % 24 % % 58 % 26 % 5 % 23 % -6 % 63 % 33 % 11 % -1 % EBIT 1 % 64 % 149 % 24 % 14 % 24 % 42 % 69 % 29 % 5 % 26 % -8 % 76 % 36 % 12 % -1 % Recurring PAT 53 % 82 % 133 % 92 % 16 % 28 % 27 % 27 % % 1 % 27 % -4 % 87 % % 13 % 1 % EPS 53 % 82 % 133 % 92 % 16 % 28 % 27 % 27 % % 1 % 27 % -4 % 87 % -38 % 13 % 1 % Margin (%) EBITDA 12 % 11 % 1 % 1 % 12 % 12 % 12 % 15 % 14 % 14 % 14 % 11 % 11 % 13 % 13 % 12 % EBIT 11 % 1 % 8 % 8 % 1 % 1 % 11 % 13 % 13 % 13 % 12 % 1 % 9 % 11 % 12 % 11 % PBT 1 % 1 % 8 % 1 % 1 % 11 % 11 % 13 % 13 % 13 % 13 % 11 % 1 % 11 % 13 % 11 % PAT 7 % 7 % 6 % 7 % 7 % 8 % 8 % 9 % 9 % 9 % 9 % 7 % 7 % 8 % 8 % 8 % November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 7 of 12

8 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Sep/17 Mar/18 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Sep/17 Mar/18 Consolidated Financials PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months P&L (Rs Mn) FY17A FY18E FY19E FY2E Balance Sheet (Rs Mn) FY17A FY18E FY19E FY2E Cash Flow (Rs Mn) FY17A FY18E FY19E FY2E Revenue 246,16 275, , ,439 Equity Capital 7,5 15, 15, 15, PBT 23,62 31,61,842 36,6 Op. Expenditure 22,238 24, , ,731 Reserve 73,439 88,338 15, ,152 Depreciation 3,691 4,186 4,416 4,416 EBITDA,923 34,47 38,124 37,78 Networth 8,939 13,338 12, ,152 Others 436 Depreciation 3,691 4,186 4,416 4,416 Long Term Debt 24,638 17,674 13,174 1,474 Taxes Paid 3,78 1,326 11,828 11,965 EBIT 22,232 3,221 33,78 33,292 Def Tax Liability 13,858 15,821 15,321 15,21 Change in WC -3, Interest Expense 2,97 1,66 1,2 92 Minority Interest Operating C/F 2,676,55 28,597 28,75 Other Income 3,466 3,49 3,333 3,884 Account Payables 9,446 7,737 7,975 8,91 Capex -5,46-2,15-7,5 PBT 23,62 31,61,842 36,6 Other Curr Liabi 9,411 13,756 14,333 15,772 Change in Invest -26,489 Tax 6,5 1,326 11,828 11,965 Total Liabilities & Equity 138, ,327 17, ,33 Others 198 PAT bef. MI & Assoc. 17,57 21,284 24,14 24,292 Net Fixed Assets 84,185 79,999 85,583 81,167 Investing C/F -31,751-2,15-7,5 Minority Interest Capital WIP 486 2,5 Change in Debt -3,128-6,964-4,5-2,7 Profit from Assoc. Others 4,594 4,594 4,594 4,594 Change in Equity 7,5 Recurring PAT 17,57 21,284 24,14 24,292 Inventory 5, 3,769 3,927 4,321 Others -4,4-4,422-7,74-7,588 Extraordinaires Account Receivables 12,18 13,533 14,1 15,516 Financing C/F -7,482-3,885-12,24-1,288 Reported PAT 17,57 21,284 24,14 24,292 Other Current Assets 533 3,347 3,27 3,836 Net change in cash -18,557 19,65 8,892 18,418 FDEPS (Rs) Cash 3,981 5,585 59,478 77,896 RoE (%) 23 % 23 % 21 % 19 % DPS (Rs) Total Assets 138, ,327 17, ,33 RoIC (%) 16 % 17 % 17 % 16 % CEPS (Rs) Non-cash Working Capital ,12-1,9 Core RoIC (%) 18 % 22 % % 24 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 26 % 3 % 3 % 3 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 11 % 13 % 13 % 12 % FA Turnover P/B PATM (%) 7 % 8 % 8 % 8 % Net D/E P/FCFF Tax Rate (%) 28 % 33 % 33 % 33 % Revenue/Capital Employed EV/EBITDA Sales Growth (%) -9 % 12 % 4 % 1 % Capital Employed/Equity EV/Sales FDEPS Growth (%) -7 % % 13 % 1 % Dividend Yield (%) 1.9 % 1.3 % 1.5 % 1.5 % TTM P/E vs. 2 yr forward EPS growth EPS Growth 7% 6% 5% 4% 3% 2% 1% % -1% -2% -3% 24x 2x 16x 12x 8x TTM P/B vs. 2 yr forward RoE RoE 4% 3% 5x % 4x 2% 3x 2x 1% 1x November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 8 of 12

9 Historical Consolidated Financials PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months P&L (Rs Mn) FY14A FY15A FY16A FY17A Balance Sheet (Rs Mn) FY14A FY15A FY16A FY17A Cash Flow (Rs Mn) FY14A FY15A FY16A FY17A Revenue 377, ,1 271, ,16 Equity Capital 7,5 7,5 7,5 7,5 PBT 1,5 9,849 11,993 23,62 Op. Expenditure 362,491 38,62 5,472 22,238 Reserve 42,361 49,386 58,64 73,439 Depreciation 3,81 3,154 3,216 3,691 EBITDA 14,985 14,39 15,863,923 Networth 49,861 56,886 66,14 8,939 Others 5,957 1,834 1, Depreciation 3,81 3,154 3,216 3,691 Long Term Debt 31,965,541 3,696 24,638 Taxes Paid 5,387 2,88 1,996 3,78 EBIT 11,94 11,236 12,647 22,232 Def Tax Liability 5,568 7,313 14, 13,858 Change in WC 4,37-4,1 19,34-3,273 Interest Expense 2,196 2,9 2,388 2,97 Minority Interest Operating C/F 18,234 8,298 33,741 2,676 Other Income 838 1,548 1,733 3,466 Account Payables 18,868 3,29 7,721 9,446 Capex -8,46-8,279-9,724-5,46 PBT 1,5 9,849 11,993 23,62 Other Curr Liabi 12,865 8,287 5,74 9,411 Change in Invest 1, ,489 Tax 3,426 1,24 2,86 6,5 Total Liabilities & Equity 119, , , ,291 Others PAT bef. MI & Assoc. 7,119 8,8 9,133 17,57 Net Fixed Assets 62,65 69,426 68,37 84,185 Investing C/F -7,685-6,654-8,538-31,751 Minority Interest Capital WIP 8,799 7,469 15, Change in Debt -2,42-6,128-2,83-3,128 Profit from Assoc. Others 3,42 7,78 4,861 4,594 Change in Equity Recurring PAT 7,119 7,119 7,119 7,119 Inventory 9,557 8,826 2,461 5, Others -5,282-4,212-4,191-4,4 Extraordinaires Account Receivables 2,157 13,428 9,885 12,18 Financing C/F -7,72-1,34-6,994-7,482 Reported PAT 7,119 7,119 7,119 7,119 Other Current Assets 1, , Net change in cash 2,846-8,696 18,21-18,557 EPS (Rs) Cash 12,826 3,621 21,829 3,981 RoE (%) 15 % 17 % 15 % 23 % DPS (Rs) Total Assets 119, , , ,291 RoIC (%) 1 % 12 % 1 % 16 % CEPS (Rs) Non-cash Working Capital , Core RoIC (%) 12 % 12 % 11 % 18 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 31 % 2 % 19 % 26 % BVPS (Rs) WC Turnover -1, P/E EBITDAM (%) 4 % 4 % 6 % 11 % FA Turnover P/B PATM (%) 2 % 2 % 3 % 7 % Net D/E P/FCFF Tax Rate (%) 32 % 1 % 24 % 28 % Revenue/Capital Employed EV/EBITDA Sales growth (%) 2 % 5 % -31 % -9 % Capital Employed/Equity EV/Sales FDEPS growth (%) -38 % 24 % 3 % -7 % Dividend Yield (%).9 %.7 %.7 % 1.9 % November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 9 of 12

10 PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Equirus Securities Research Analysts Sector/Industry Equity Sales Abhishek Shindadkar IT Services Vishad Turakhia Ashutosh Tiwari Auto, Metals & Mining Subham Sinha Depesh Kashyap Mid-Caps Sweta Sheth Devam Modi Power & Infrastructure Viral Desai Dhaval Dama FMCG, Mid-Caps Dealing Room Manoj Gori Consumer Durables Ashish Shah Maulik Patel Oil and Gas Ilesh Savla Praful Bohra Pharmaceuticals Manoj Kejriwal Rohan Mandora Banking & Financial Services Dharmesh Mehta Associates Sandip Amrutiya Ankit Choudhary Compliance Officer Bharat Celly Jay Soni Harshit Patel Corporate Communications Meet Chande Mahdokht Bharda Parva Soni Pranav Mehta Ronak Soni Samkit Shah Shreepal Doshi Varun Baxi Vikas Jain Rating & Coverage Definitions: Absolute Rating LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap > Rs 5 billion and ATR >= 2% for rest of the companies ADD: ATR >= 5% but less than Ke over investment horizon REDUCE: ATR >= negative 1% but <5% over investment horizon SHORT: ATR < negative 1% over investment horizon Relative Rating OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon BENCHMARK: likely to perform in line with the benchmark UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion. Registered Office: Equirus Securities Private Limited Unit No. 121, 12th Floor, C Wing, Marathon Futurex, N M Joshi Marg, Lower Parel, Mumbai-413. Tel. No: +91 () Fax No: +91- () Corporate Office: 3rd floor, House No. 9, Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge, S.G. Highway Ahmedabad-3854 Gujarat Tel. No: +91 () Fax No: +91 () Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Equirus Securities Private Limited November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 1 of 12

11 Analyst Certification PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months I, Maulik Patel, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Disclosures Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH27PTC17644 is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the Capital Market (Reg. No. INB ), Futures & Options Segment (Reg. No.INF ) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB ) of Bombay Stock Exchange Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 214 (Reg. No. INH1154), as a Portfolio Manager under SEBI (Portfolio Managers Regulations, 1993 (Reg. No. INP5216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No. IN-DP ). There are no disciplinary actions taken by any regulatory authority against ESPL. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to merchant banking services, private equity, mergers & acquisitions and structured finance. As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for investment banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have received a mandate from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their directors and employees may from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in their proprietary position) 1% or more of the equity securities of the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or Associates did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ESPL has not been engaged in market making activity for the subject company. The Research Analyst engaged in preparation of this Report:- (a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in the past twelve months; (c) has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject company or third party in connection with the research report; (f) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company. This document is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ESPL and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession of this document are required to inform themselves of, and to observe, such applicable restrictions. Please delete this document if you are not authorized to view the same. By reading this document you represent and warrant that you have full authority and all rights necessary to view and read this document without subjecting ESPL and affiliates to any registration or licensing requirement within such jurisdiction. This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe any security. ESPL or its affiliates are not soliciting any action based on this report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources believed to be reliable but ESPL provides no guarantee as to its accuracy or completeness. The information contained herein is as on date of this report, and is subject to change or modification and any such changes could impact our interpretation of relevant information contained herein. While we would endeavour to update the information herein on reasonable basis, ESPL and its affiliates, their directors and employees are under no obligation to update or keep the information current. Also there may be regulatory, compliance, or other reasons that may prevent ESPL and its group companies from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document including the merits and risks involved. This document is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. ESPL and its group companies, employees, directors and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. ESPL/its affiliates do and seek to do business with companies covered in its research report. Thus, investors should be aware that the firm may have conflict of interest. A graph of daily closing prices of securities is available at and (Choose a company from the list on the browser and select the three years period in the price chart). November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 11 of 12

12 PLNG Absolute REDUCE Relative Underweight 4% Downside in 17 months Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest Research Analyst or Relatives financial interest Research Analyst or Relatives actual/beneficial ownership of 1% or more Research Analyst or Relatives material conflict of interest No No No Disclaimer for U.S. Persons ESPL/its affiliates are not a registered broker dealer under the U.S. Securities Exchange Act of 1934, as amended (the 1934 act ) and under applicable state laws in the United States. In addition Equirus is not a registered investment adviser under the U.S. Investment Advisers Act of 194, as amended (the "Advisers Act" and together with the 1934 Act, the Acts ), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by Equirus, including the products and services described herein are not available to or intended for U.S. persons. The information contained in this Report is not intended for any person who is a resident of the United States of America or a resident of any jurisdiction, the laws of which imposes prohibition on soliciting the securities business in that jurisdiction without going through the registration requirements and/ or prohibit the use of any information contained in this report. This Report and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not be considered as an advertisement tool. "U.S. Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed "US Persons" under certain rules. November 9, 217 Analyst: Maulik Patel maulik@equirus.com ( ) Page 12 of 12