09-002- Petronet LNG – Stockwatch series | Financial Wisdom By Kalidas

09-002- Petronet LNG – Stockwatch series

with 28 comments

Ref: 09-002 of 14-Dec-2009 (Use PDF file from Sidebar Box.net for printing)

Stock

PETRONET LNG LTD (PLL)

Sector

Oil » GAS

Market

India

Ref No

09-002

Symbol

PETRONET

BSE at

532522

NSE at

PETRONET

Date YMD

09.12.14

CMP (11/Dec)

73.10

Target ST

108

Target LT

235

Year High

84.90

Year Low

31.60

ST Hold

LT Hold

28 m

Face Value

% Down Peak

-12.72%

Downside

-18%

Upside

+50% ST
+275% LT

EPS 08-09A

6.91

EPS 09-10 Est.

11.20

EPS 10-11P

15.10

EPS11-12P

19.63

PE 08-09 A

4.63

PE 09-10 Est.

9.5

PE 10-11P

PE 11-12P

Div/share

1.75

Div Yield% CMP

2.40%

Buy Range

48B,58M,
75T ST

Sell Range

92~108 ST

TARGET

4 Mo

108

24 Mo

180

36 MONTHS

275

48 MONTHS

360

Notations

A = Actual; Est. = Estimated; *P = Projected; ST=Short Term; LT=Long Term; B= Best; M=Medium; T=Trading; Upward target could be higher by further 20% due to momentum buying.

Comments

The company’s expanded capacity at Dahej has become operational. As result, its quarterly sales have shot up from 2600 crores to 3400 crores. For 6 months ending Sep09, total sales have reached Rs 6000 crores. Based on latest quarterly performance, the company should clock sales of Rs 13000 crores by Mar2010 or for the year 2009-10.which is +55%. In future, the Kochi refinery will contribute additional 25% and 50% of revenue in 2 years starting end 2010 onwards. Further, the development of solid cargo port near its LNG terminal in joint venture with Adani group will contribute further revenue, being 26% owned it may not be eligible for equity accounting. Its effects are ignored.

The company is on solid growth path, growing at the clip of 35% in terms of volume and 55% to 75% in value terms depending on price realization. It has already secured gas supply from Qatar for Dahej project, and Australia for Kochi project from 28 to 20 years.

The only unknown variable will be how much Reliance’s Gas project will affect the company’s present arrangements. It is also not known whether the company has price escalation or de-escalation clause in its agreement with Qatar and Australia. Reliance is a subsequent phenomenon. Qatar being the world’s largest and cheapest supplier of gas will ensure that Petronet will remain highly competitive

Of late; Gas has become the cheapest, non pollutive and most efficient mode of energy. The use of oil will be relatively less. Due to emphasis on green technology and carbon emission control, the use of gas will be predominant in every industrial and consumer area. More and more cities are being converted to using gas (LNG and CNG) as the compulsory use of energy product to avoid pollution due to Auto vehicles. With more and more expansion of roads, infra structures, power plants and more production of automobiles, the use of gas is likely to be much higher than even anticipated.

The projections used above are Author’s projections based on past, present and future expansion plans. They may differ significantly from prominent brokers or research houses that draw upon published figures or projections from governmental sources. They usually do not include the present trend in the industry. When gas becomes plentiful, the use electricity will be reduced in household (already costly electric heaters are being replaced by LNG or Piped gas operated cheaper heaters.

The future of the world is on gas, not electricity or oil. This is why this author has been recommending gas based stocks.

Links

Company Website: http://www.petronetlng.com
Quarterly Results : Quarterly up to Sep09

Stock Behavior

The stock has been in pressure due to some negative or less optimistic scenario about the company. As result, the stock has been underperforming of late compared to the market. It is only recently that the stock has started rising higher breaking strong resistance at about Rs 65.
The December 09 quarterly numbers will justify the Author’s projections and there is every possibility that the stock may be rated upwards. The company has solid equity partners in the form of GAIL, ONGC, BPCL, and Oil India who are all cash rich companies. The company will not face any financial constraints at least for next 3 years. The company is less dependent on foreign investment or borrowings as result of which tight money markets abroad will not hurt it in meaningful way.
The stock should gain upward momentum once it exceeds Rs 80 and stay above it for at least 7 days. The stock may rise to Rs 108 to Rs 120 until mid April. It also depends on the Reliance effect – the Supreme Court judgment on RPOWER’s gas dependent project. If RIL wins, the RPOWER could become important customer of this company.

The company is also known as PLL or Petronet LNG Ltd.

Post-Purchase Care

Watch out for RIL’s gas price related policy and its actual production. There has been lot of hypes on Kaveri-Godavri basin gas project. We have to see two directions – what is the actual volume of gas at RIL, its cost structure, and whether RIL will be able to compete Qatar and Australia in gas supply.

Also watch out world equity market. It is likely that “currency contagion” may be developing soon, which may hurt global equity markets. For the time being, it Is advisable to trade 70% of stocks, always keeping 30% intact for long term. If the global equity market does come down significantly, one may get excellent chance to get into this stock at cheaper price at a time when the company is in full production throttle.

Over 4 years time frame, this stock could go up to over Rs 450 or more, presuming there is no equity dilution and company’s Kochi project goes on stream as scheduled. Also, the stocks during good time always overshoot by 20% than fair market value, what we call “momentum buying”. If those stage is reached early, get out at that time and do not enter unless stock corrects significantly (over 40% from Peak)

This is perhaps one of the Best Buys into Indian market even at elevated level.

SUITABILITY OF INVESTORS

Kalidas is extremely bullish on this company. This is the stock for all kind of investors, including retirees and widows. Until now, the dividend pay out has not been significant. Presuming overall sales of Rs 24000 crores in less than 3 years, expanded 8% post tax profit margin, the future profit of Rs 1920 crores is expected of which 25% may be reserved for dividend or Rs 480 crores or Rs 6.4 per share. (there are 75 crores shares outstanding) The future dividend yield based on current price of Rs 73 works out to 8.76%, much higher than current bank deposit rates.

STOCK SWAP
If you own the following stocks or slow movers, you may sell them to raise the cash and Buy the above stock. The idea is to enhance the potential return in short time frame. Please note that in down market, such swaps may worsen your position. However, if you are careful as well as lucky to have bought stocks near low, the SWAP will not only recover but also make handsome gain.
SELL	Any stock between Rs 75 to Rs 1500 where your losses exceed 30% to 50%. This stock will smartly recover your money early and also give you sizeable return. For Instance, you are losing Rs 300 in say, LT. Sell it and buy this stock, You will get 20 shares for each LT sold. Also put in fresh money and increase the quantity by 50%, so that you have 30 shares of this stock for every existing LT sold. . Your return will be higher by 50%. LT is used as an example only.	YOU RECEIVE	Use any losers or slow movers of high value you have
BUY	PETRONET LNG	YOU PAY	73/share

POST RECOMMENDATION CHANGES

The situation may materially change from current scenario that could affect the stock recommendations. Following actions are suggested. This will be filled up later by the Author when necessary. This is only the format in which the future comments will be given

Date Changed

SUGGESTED ACTIONS

REASONS IN BRIEF

Authored by Anil Selarka (Kalidas). CAUTION: The market may not behave as intended. The above opinion is given subject to no claim, liability or responsibility.

Copyrights © Anil Selarka (Kalidas) Published for Blog – Financial Wisdom of Kalidas – http://anilselarka.com

Kalidas (Anil Selarka)

Hong Kong Ref: 09-002 of 14-Dec-2009: Series – Stockwatch
Watch the PDF file in turning page style from Yudu.com. Click the page to enlarge and click the page end to go to next page. You may also download PDF file from this site.

Stock

PETRONET LNG LTD (PLL)

Sector

Oil » GAS

Market

India

Ref No

09-002

Symbol

PETRONET

BSE at

532522

NSE at

PETRONET

Date YMD

09.12.14

CMP (11/Dec)

73.10

Target ST

108

Target LT

235

Year High

84.90

Year Low

31.60

ST Hold

LT Hold

28 m

Face Value

% Down Peak

-12.72%

Downside

-18%

Upside

+50% ST
+275% LT

EPS 08-09A

6.91

EPS 09-10 Est.

11.20

EPS 10-11P

15.10

EPS11-12P

19.63

PE 08-09 A

4.63

PE 09-10 Est.

9.5

PE 10-11P

PE 11-12P

Div/share

1.75

Div Yield% CMP

2.40%

Buy Range

48B,58M,
75T ST

Sell Range

92~108 ST

TARGET

4 Mo

108

24 Mo

180

36 MONTHS

275

48 MONTHS

360

Notations

A = Actual; Est. = Estimated; *P = Projected; ST=Short Term; LT=Long Term; B= Best; M=Medium; T=Trading; Upward target could be higher by further 20% due to momentum buying.

Comments

The future of the world is on gas, not electricity or oil. This is why this author has been recommending gas based stocks.

Links

Company Website: http://www.petronetlng.com
Quarterly Results : Quarterly up to Sep09

Stock Behavior

The December 09 quarterly numbers will justify the Author’s projections and there is every possibility that the stock may be rated upwards. The company has solid equity partners in the form of GAIL, ONGC, BPCL, and Oil India who are all cash rich companies. The company will not face any financial constraints at least for next 3 years. The company is less dependent on foreign investment or borrowings as result of which tight money markets abroad will not hurt it in meaningful way.

The stock should gain upward momentum once it exceeds Rs 80 and stay above it for at least 7 days. The stock may rise to Rs 108 to Rs 120 until mid April. It also depends on the Reliance effect – the Supreme Court judgment on RPOWER’s gas dependent project. If RIL wins, the RPOWER could become important customer of this company.

The company is also known as PLL or Petronet LNG Ltd.

Post-Purchase Care

This is perhaps one of the Best Buys into Indian market even at elevated level.

SUITABILITY OF INVESTORS

STOCK SWAP
If you own the following stocks or slow movers, you may sell them to raise the cash and Buy the above stock. The idea is to enhance the potential return in short time frame. Please note that in down market, such swaps may worsen your position. However, if you are careful as well as lucky to have bought stocks near low, the SWAP will not only recover but also make handsome gain.
SELL	Any stock between Rs 75 to Rs 1500 where your losses exceed 30% to 50%. This stock will smartly recover your money early and also give you sizeable return. For Instance, you are losing Rs 300 in say, LT. Sell it and buy this stock, You will get 20 shares for each LT sold. Also put in fresh money and increase the quantity by 50%, so that you have 30 shares of this stock for every existing LT sold. . Your return will be higher by 50%. LT is used as an example only.	YOU RECEIVE	Use any losers or slow movers of high value you have
BUY	PETRONET LNG	YOU PAY	73/share

POST RECOMMENDATION CHANGES

Date Changed

SUGGESTED ACTIONS

REASONS IN BRIEF

Authored by Anil Selarka (Kalidas). CAUTION: The market may not behave as intended. The above opinion is given subject to no claim, liability or responsibility.

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Written by Anil Selarka

December 13th, 2009 at 7:15 am

Posted in

28 Responses to '09-002- Petronet LNG – Stockwatch series'

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Dear Sir,
Petronet Q1 results have been declared, here is the link below

http://indiaearnings.moneycontrol.com/sub_india/compnews.php?autono=473605

The results were not so good, so your view on the Quarterly Resuls?
I am holding 2000 shares @82/- since last 3 years,
CMP-91.
Should I add more at this level or Should I wait.
What will be the Short term target for this stock, and does your long term target is still intact after seeing the Q-1 results.

Regards
Basant Kejriwal,Delhi, INDIA

Kalidas says…Friday, July 30, 2010
It is the sectoral push by certain leading international brokers who gave bullish call on “Gas sector”.

The same call was given by us almost 1 1/2 yeas back that “Gas was the future, not oil” . The Petronet was at around Rs 28 and again reiterated call in Sep 2009 when the stock was at Rs 73 or about.

Now, you have to look at the future, not the past. The gas prices have been doubled and decontrolled. Even ONGC reported on 30/7 that its gas income would show significant rise. It is also expanding into “gas exploration and production in India, Iran and Vietnam.

Even Petronet is getting into gas production in Iran. The present income from re-gasification will rise and more when it indulges in outright buying and selling of gas. The company has strongest shareholders one can find, and as such it does not have financial constrain.

Yes, yesterday’s rise was due to heavy buying by funds responding to “Gas Sector” BUY call from leading broker (Goldman Sachs). It has corrected today, but it is still on our wish list. May be one can sell to book trading profit. But after today’s correction by about 4%, the stock may rebound after initial dip in tomorrow’s morning trade.

No other comments are warranted. Everything we mentioned is coming out on schedule.

Please note that the company is transporting gas via pipe line which entails heavy depreciation charge. Further, the company’s Capital Work in Progress shows heavy rise in CAPEX that means that more capacity may come to stream within 3 years, but Depreciation charge will also increase. In other words, the Cash Profit without depreciation (which is a book entry) is much larger.

The real rise in earning will come when Petronet shies away from being s service company (transporting gas) and gets into production where the profit is several times larger.

The company may also come up with the rights issue within a few months (there were rumors before), so we expect the stock to rise to 108 to 120 before the rights issue is announced.

For trading investors, it is a sell in rally, for long term investors, better use Safe Deposit Locker to lock in the BOUGHT NOTE and open the locker only after 2 years.

Basant

30 Jul 10 at 12:03 PM
Dear Sir,
I am convinced with your article on SOR, but If I want to hold Petronet then what should be the target for Petronet in Short term(3-4 months).
Actually I want to trade 8000 quantity , so from what level should I start selling.
And will it be better to sell 2 call options(lot of 4000 shares) at CMP-81.

Regards
Vikas , Patna, India

Kalidas Says….Tuesday, 13th july, 2010
92 and 108

you can sell CALL OPTION when the stock suddenly rises. Use in money call when the stock goes to little above 92. For instance, if the stock moves fast to 92 level, sell inmoney call options 4000 shares equivalent at price of 90 for July or August wherever you get higher premium. When the stock corrects by even 5%, buy back your call options.

Vikas

13 Jul 10 at 4:29 PM
Dear Sir,
I have read your new article on SOR to grow about 500%.

Firtst of all I want to say that I am 100% invested out of which 20% is gold and 80% is Petronet Lng. That 80% is near about 18000 shares of Petronet Lng at an average rate of 83/-(about RS.15 lac).
Sir as mentioned by you in STOCK WATCH that Petronet could also grow about 4-5 times in 3-4 years, therefore do you still have that view, because in last 12 months it has not performed well and is in the range of 70-85.
If you think that this stock can also grow 4 times in 4 years than should I remain invested or should I need to change anything i.e. should I sell some quantity and buy SOR.
Because after seeing the development of last 4 months related to GAS policy of Government, I am little worried.
I Can hold Petronet for 3-5 years and its CMP-81.
Plaese Guide, and thanks for the Valuable time which you are giving to small investors like us by writing this BLOG.

REGARDS
VIKAS, PATNA, INDIA

Kalidas says…Monday, July 12, 2010
Yes, Petronet could rise too, but at the moment, it is lacking momentum. Petronet is pure gas play, whereas SOE refiners deal in mutiple products. Oil can be used in making Petrol, Kerosene, Diesel, heating, transportation, etc. Oil is more versatile than gas.

At the moment, the momentum lies in SOE Stocks. So it makes sense to switch some of your Petronet holding into SOE Refiners. Sell 50% to 60% of Petronet and switch to SOE Refiners, if you are convinced of the reasoning.

Vikas

12 Jul 10 at 1:36 PM
Dear Sir,
Petronet is been falling inspite of the market had move a lot in the last few days.
Should I accumulate more at CMP-78 for Short term.
The company had also said that it will raise money through RIGHTS ISSUE at the end of 2011, here is the link
http://www.moneycontrol.com/news/business/petronet-lng-won`t-tap-spot-market-till-dec_465990.html

And do you see any impact of Deregulation of oil prices in its Business.

Regards
Basant Kejriwal,
Delhi,India

Kalidas says…Sunday, June 27, 2010
Rights issue is months away. Interest rates may rise steeper than expected (expected 0.25%, Kalidas View 0.5%). that may hurt the markets badly. Buy during that correction. If you do not own any, you may buy 15% of desired quantity now. Oil and gas policy benefits Petronet and the said news is earnings positive for the company.

Basant

26 Jun 10 at 4:11 PM
Dear Sir,

http://www.moneycontrol.com/news/buzzing-stocks/petronet-lng-plans-to-raise-rs-1200cr-via-rights-issue_462174.html

Petronet is going to Dilute its equity by raising 1200 crores
Through RIGHTS ISSUE.

Therefore my question is what could be the effect of this issue on Company’s Performance and Balnce Sheet going forward.
And does your target remain same with more equity coming in the market.
And should I buy at CMP-82 ,( I have sold all my holding in Petronet.)

Regards,
Basant Kejriwal, Delhi, India
11 june 2010

Kalidas says…Sunday, June 13, 2010
The company is in huge expansion mode. They have 75 crore shares outstanding. It looks like they might raise the new capital @ Rs 80 per share or 15 crore new shares resulting in 20% dilution. However, the increased income will more than compensate the rise in equity. The interest cost may also come down by Rs 100 crores (8% of 1200 crores) which may raise the EPS by Rs 1.33 per share on basic basis and Rs 1.15/shr on fully diluted basis.

Higher income and low interest cost will benefit the company on expansion mode. Yes, my target will be affected by about 15% from top end target.

I do not see much downside in the stock price. The Investment Banks holding the mandate to raise the equity will push up the stock to get it fully subscribed. If the market corrects sharply, then the stock might see the level of 65~70.

If the price for right issue is less than Rs 60, then the stock may come down to lower level of 60s

Basant

11 Jun 10 at 2:40 PM
Dear Sir,
Petronet Lng Q-4 results have been declared.
http://www.moneycontrol.com/news/results/petronet-lng-q4-net-profit-down-at-rs-973-cr_454091.html

The result is not so good. Therefore do you still think that
this Company will do better in terms of earning in the days to come?
And do you STILL hold the view that PETRONET LNG will reach the target price of Rs.300 per share in 2-3 years of time frame?
Please Give your Views.

BASANT KEJRIWAL, DELHI, INDIA

Basant

28 Apr 10 at 7:06 PM
Dear Sir,
I have Purchased 9000 shares of Petronet Lng at an
average price of 78.3 in the last two months.
Very recently this stock had made a high of 86 (two weeks ago) and now the CMP is 81.5, but I have not sold any shares.
I am a long term investor and can hold it for 3 years.
But Should I trade any quantity or just hold it for long term?
OR Should I reduce some holding and purchase UCO BANK and DISH TV.
Please Advice.
Vikas , Patna , INDIA

Kalidas Says ….Tuesday, April 27, 2010
Take profit on 4000 shares and retain rest 5000 shares of Petronet
Buy about 2000 shares of UCO Bank @66.85 or about + 2000 shares of Dish TV (36.70) + 500 shares of Exide Industries @123(who make Auto Batteries and the stock is just about to break out on the top side)

Vikas

27 Apr 10 at 8:22 PM
Dear Sir,
http://economictimes.indiatimes.com/news/economy/policy/Govt-plans-to-subsidise-imported-LNG/articleshow/5840369.cms
I have provided the link above,
Please advice what could be the affect of this to
Petronet Lng.

Basant Kejriwal
Delhi, India.
22/04/2010

Kalidas Says ….Friday, April 23, 2010
It is good for Petronet on the face of it. However, if the subsidy takes the same route as State Owned Refineried, then Petronet too will go BPCL/HPCL way. The government is playing cheap stuff – try to appease the masses by subsidy news and does not pay that amount to oil/gas companies.

The news also shows poor judgment of Petronet in entering Long Term contract at higher prices.

I would reconsider my opinion later if the above event happens. Until such time, my view remain same as before, but I will follow the newslead.

Basant

22 Apr 10 at 12:52 PM
Dear Sir,

I have purchased 2000 petronet lng at 82 nearly 2 years ago.
Now the CMPis 85.

I know your long term target is still intact, but now I cant hold it for more then 6 months.
Therefore should I hold or exit at CMP.
Please Advice.
Basant Kejriwal, Delhi, India

Kalidas Says ….Thursday, April 15, 2010
Hold it for at least 6 months. It is on rise and will rise more.

Basant

12 Apr 10 at 4:29 PM
Dear Sir
Nice to see you back

I have missed the oppurtunity to buy Petronet LNG at 71.35
Now the CMP is 78.
Should I buy it now or wait for the prices to go down.
It is not possible for me to track the prices every day.
I can hold it for 2 year and what is the upside target in 2 yeras of time.
Please Advice

SAKCHI, NEW DELHI, INDIA
05/03/2010

Kalidas Says ….Tuesday, March 09, 2010
My upside target for Petronet is almost 4 times or rise in value by at least 300% or the price target of Rs 260 or more. In that case, I do not care whether you pay Rs 71 or Rs 80 if you really plan to hold over 2 years. I mentioned that target when the stock was in Mid thirties.

sakchi

5 Mar 10 at 2:05 PM
Dear sir,
I have bought shares of Petronet lng as detail mention below

          Date                          Quantity                          Buy rate
     15/01/2010                 1000                                     81
    05/02/2010                 1500                                     75
should I add more at CMP-73, or sell my 2500 shares and try to buy at lower price when market falls?
I can hold my investment for 12-15 months.
Please Advice.

Praveen Kumar, Kolkata, India, 11/02/2010

Kalidas Says ….Thursday, February 11, 2010
Set target to buy 2500 shares $ 65 or below due to bad market.

praveen kumar

11 Feb 10 at 12:43 PM
Dear Sir,
Petronet Lng has not fallen very much with the market.
Should I buy Now atCMP-76, or wait for 71.
I am at 100% cash. And I want to invest 70% of my cash in Petronet.
Thanks to you for advising us early to liquidate our Portfolio.
Please suggest.
Vikas Agarwal, Patna, Bihar, India

Kalidas Says ….Thursday, January 28, 2010 at 10:40 PM HKST
It clearly shows that Petronet is a very strong stock. However, you have to have patience to buy the stock at good price. When that price comes, pounce on it. Placing 70% of money in single stock is a big gamble. You may do that when the market corrects severely at least 30%

Even if I gold, I do not invest more than 20% of investment budget. You also follow same rule in case of Petronet. If you like the company, and convinced on my finding, buy at least some shares in correction when the market sees sharp fall as yesterday. My targets are relative, not absolute.

Vikas

28 Jan 10 at 4:13 PM
Dear Sir,
I have Purchased 1000 Petronet @ 77 and sold it(1000 shares) Last Week @79.6.
CMP of Petronet is 76. Should I Buy Now or wait till Petronet goes below 71.
Please ADVICE
SAKCHI, NEW DELHI, INDIA

Kalidas Says ….Wednesday, January 27, 2010 at 3:19 PM HKST
Sentiments are weak. Try to buy at 71.35 or about

sakchi

27 Jan 10 at 12:44 PM
Dear Sir,
I have 2000 petronet lng @82.
Should I book my loss or Add more at CMP-74.
The Q-3 results were not up to expectations.
Does your Long Term and Short Term target of Petronet still intact as mentioned in STOCK WATCH ?
Please Advice.
Basant Kejriwal, Delhi, India

Kalidas Says ….Friday, January 22, 2010 at 2:22 PM HKST
Stay with it. My call remain same, so also the Target. Read my reply to someone yesterday. due to uncertain market I would not add more now. But yes, I would BUY this stock upto Rs 92

Basant

22 Jan 10 at 1:20 PM
Dear Anilji,
Petronet LNG Q3 result is out.
Result Link
It looks like if we remove interest cost & depreciation cost compare to last year qtr., result is looking good. Both this cost are mainly on the account of expansion at Dahej & new re gasification facility at Kochi.
Though worrying thing is revenue is decreased both on Year on Year as well as Quarter on Quarter basis.
Don’t you think domestic gas production will hurt Petronet or overall demand will be sufficient for both Reliance & Petronet?
Thanks.
Parag, Surat

Kalidas Says ….Thursday, January 21, 2010 at 11:10 PM HKST
See my reply today elsewhere. for 9 months, the revenue has risen by over +60% – they have not fallen. Yes, there is marginal fall in revenue on Q2Q basis, but it may be due to gas prices which were lower in 2009 than in 2008 (they were almost twice). Nothing to worry about. You will see very strong sales in 4QMar2010 and real rise will be seen in 1QJune2010. It takes some time for new capacity to work at full throttle. This is technical matter

Parag, Surat

21 Jan 10 at 10:58 PM
Should we take exit/book loss(bought @81.90) and later buy it @60-65/- level ?
I’m worried. Money is blocked @ highest rate.
Pls advice.
dolly
Bangalore, India

Kalidas Says ….Friday, January 22, 2010 at 10:49 AM HKST
To seek advice on any stock, mention (1) stock name, (2) Purchase Date (3) Qty, (4) @Cost and (5) CMP. Symbol not necessary. No reply will be posted if these 5 details are not given.

To be specific, stay with it. It will work wonders later. Unless I have complete information as above, I can not form clear opinion for you.

dolly Jain

21 Jan 10 at 10:24 PM
Dear Sir,
Result of December quarter out. It’s average.
Your Short view Please.
Thanks
Bhavesh NaviMumbai, India

Kalidas Says ….Thursday, January 21, 2010 at 10:50 PM HKST
Short glance. The company’s expanded capacity comes on stream only from 1 Jan 2010. Until now, the interest and depreciation cost used to be debited to Capital account (they were capitalized and debited to Work in Progress). When the capacity comes on stream, those charges get debited to regular P/L account. This is the main reason for fall in profit. You have to compare the Operating Profit which has increased from Rs 159.66 crores to Rs 162.18 crores. Further, the depreciation, interest (Finance) charges increased in 3Q2009 which got debited at much higher level to P/L account which used to be capitalized before. See the PETRONET 3Q2009. See especially depreciation, interest (Finance charges) and deferred tax liability. The clear treatment will be seen only 4QMar2010 when the account gets finalized. The lower sales during Dec quarter may be due to 2 factors – lower gas prices compared to last year. However, gas prices have gone up of late due to severe cold season.

The fall in profit is more attributed to accounting treatment. Yes, there is lower reporting of sales – the company has not issued any clarification.

The fact that the higher revenue will get reflected only from 4Q, but full utilization will be felt from 1QJune2010. The capacity has doubled. The company is clearly on growth path. I am not changing my long term call, unless new things come to light.

Bhavesh

21 Jan 10 at 7:56 PM
Dear sir,
I have purchased 1000 petronet @77. CMP – 81
Should I hold/ add more/ sell before 21st january?

I am totally confused, Please advice me.

Sakchi, Kolkata, IndiaKalidas Says ….Tuesday, January 19, 2010
Read my sale call. It excepts Gas stocks. My original sale call was 40% + another 40% now, so remaining is 20% in which you can include Petronet. Further, sell even some Petronet if it rallies. We have market risk, not stock risk. Buy it back if the market really corrects as expected by us. The period of 25/1 to 19/2 is heavy for the stock markets world over.

sakchi

19 Jan 10 at 3:27 PM
Dear sir,
I read your comments regularly And this is my first query.

I am a long term investor and so I want to know that do you think Petronet LNG has a potential to be a Multi-Bagger stock (for say 20-30 times) from CMP in coming 10-15 years of time frame?
I also hold 1000 Shares of Petronet @ 94. Should I buy more at 81 or wait for the correction?
Please suggest.
Vikas Agarwal , Patna , Bihar , India.

Kalidas Says ….Friday, January 15, 2010
Multibagger is “Chaloo” language like Amitabh Bachhan’s use of Mumbai hindi “Apun ko”. Do not use it here again.

A good stock can multiply 20 to 30 times if it is bought at the height of the crash, but no one has patience to hold it. People sell the stock when it has made “sandwich” money. Read report on Petronet under stockwatch on the sidebar. From current prices it can grow to 5 times; 30 times I do not know.

Vikas

15 Jan 10 at 1:26 PM
dear sir,
Sorry for not following your protocol in my earlier post.

Due to some problem I missed the current rally in petronet.
So I want to know that can I buy Petronet at cmp of 82 for short term?
Please suggest.
Name – Praveen Kumar
City- Kolkata
Country- India
Date of Posting- 14th January 2010.

Kalidas Says ….Thursday, January 14, 2010
Answer is YES. Go ahead.
No need to be elaborate in your signature. Write in one line {Name}, {City}, {Country}

praveen kumar

14 Jan 10 at 3:00 PM
dear sir,
I follow you regularly

Due to some problem I missed the current rally in petronet.
So I want to know that can I buy Petronet at cmp of 82 for short term?
Please suggest

Kalidas Says ….Thursday, January 14, 2010
No reply is posted since you did not append your signature as per protocol. Read the body of our Confused Mind Clear Answers above before posting any query.

kumar

14 Jan 10 at 12:18 PM
sir,
Petronet has started to move upside
I have missed it at 73
Can I buy it at 78-80 ? For short term ??
Please advice

Kalidas Says ….Tuesday, January 12, 2010
buy it now about 76.70.

sakchi

12 Jan 10 at 1:47 AM
mr kalidasa, i had seeked your advice for suzlon at 69, hindalco at 119 in november confused mind series and you had advised me to sell at those market prices. see today at what price they are quoting hindalco at 179 and suzlon at 93 . if you are not god, then why are you giving free advices. we dont require your free advice and please dont mislead everyone. i urge everyone not to follow his advice.
further since november he had come with an announcement “sell call” and the market still gave more than 20 % returns in a stock individually. so you people decide and then think of following.

Kalidas Says ….Friday, January 08, 2010
This is a wrong forum. You are referring to Confused Mind Clear Answers series, so re-post your questions there. Oterwise, it will be out of context. You will be replied there. Also Spell check your message and capitalize the words properly before you post.

Reminder: Please append City and Country name to your signature invariably.

Your question will be deleted from here in 2 days.

paresh rawal

7 Jan 10 at 12:07 PM
sir,
I hold 1000 petronet @ 87
Should I continue to hold

Kalidas Says ….Thursday, January 07, 2010
Why do you ask when I have mentioned sales target over Rs 250 on long term basis?

If your question is about my sale call, then my reply is to wait until 21 Jan. The stock is on upward trend. The rally has just started. Think of selling at about 103 to 108 on short term basis if there is no damange to market. Last December quarter should be good which may be known in middle or end of January. The risk of owning is less.

Due to severe cold everywhere the gas has come into great demand that has pushed up price of gas and gas stocks the world over. Gas is single most energy component used in heating the homes in winter. In other words, the climate is in favour of gas stocks.

basant

7 Jan 10 at 6:58 AM
Today and next two days are off for stock market but there shows 12 visitors online on your blog.

That means, people doesn’t come at you for only stock market but Wisdom you share.

I think you should change top of your blog from “financial wisdom of Kalidas’ to “Wisdom of life from Kalidas”

Thanking you
God bless you

Bhavesh, India

Kalidas Says ….Saturday, December 26, 2009
Reminder: To get reply, please append City and Country name to your signature invariably. I have appended your signature.

I do not know how far the visitors numbers could be relied on. If someone keeps his computer on with my blog as home page, it will show up as the visitor.

Of course, my blog traffic has increased a lot of late. We have noticed 45% increase in blog traffic in last 3 months. I receive many comments from non Indians from North America and other western countries, but my built in spam program transfer such comments to “spam” automatically due to in built formula.

Thanks for your other suggestions. Whatever be the title of this blog, it is for the reader to judge what it is. I try to be as much helpful as possible.

Bhavesh

26 Dec 09 at 12:49 AM
Submitted on 2009/12/26 at 12:41am

Dear Sir,
I just read quarterly results of Petronet Lng & found out that NPM are fallen drastically. Here are NPM of last five quarters.
Sept’08- 12.09
Dec’ 08- 4.25
March’09- 7.70
June ‘09 – 3.95
Sept’ 09- 3.54

In your projection worksheet, You have projected EPS of FY 2009-10 Rs. 11.20 per share. While company have just archived Rs. 2.99/- per share for two quarters. To achieve your target company will have to make profit or Rs. 616 Cr pr Rs. 8.21/- per share for current and next quarter.

If we calculate last quarter’s sale Rs. 3400 cr then company will post Rs. 6800 cr for current and next quarter. And assume NPM 5% .Company can make Rs. 340 cr or Rs. 4.50/- per share.

Still, you think Rs. 8.21/- per share achivable?

Thanking You
Bhavesh
Navi Mumbai

Kalidas Says ….Sunday, December 27, 2009
You have to understand why NPM has fallen sharply. When the construction is in progress, almost all expenses including interest are capitalized. When the concerned capacity comes on production stream, heavy depreciation and recurring interest cost (which used to be capitalized) gets debited into normal P/L account. this is why interest cost was higher in Sep quarters (rose from Rs 28 crores to Rs 51 crores)

It looks to me that you are possibly a Chartered Accountant. We can not work out simple arithmetic in projections.

Consider incremental profit for incremental sales. When Petronet Gross profit rose from Rs 210 crores to Rs 272 crores or by Rs 62 crores on incremental sales of Rs 800 crores, the incremental profit rate comes to close to 7.75%. You have taken 5% flat rate – I am taking incremental rate.

The next two quarters – Dec and March will add sales of Rs 6800 crores or about 2000 crores over corresponding period or even sequential basis. The gross profit may rise more than 7.75% because higher capacity realization normally yield higher profits than mathematically calculated.

There are many variable along the way. Have you seen the reasons for higher EPS by 7.99 in March 2009? If it could have so much EPS during mar 09, why Petronet with 100% higher volume can not have even higher EPS ?

I have taken into higher EPS due to higher volume and also margin. When the EPS for 2008-09 was 6.91. expectation of Rs 11.20 for 2009-10 is based on revenue of Rs 13000 crores against revenue of 8000 odd crores in 2008-09. The rise of turnover by Rs 5000 crores or 60% plus makes the target of Rs 11.20 more achievable.

Even latest news suggest that Petronet may take a large stake in Iran’s Gas field which will benefit it pro rata of 5 to 6 million tons of gas. Petronet was never part of production sharing where the profits are much higher. We have not accounted for this potential income because nothing is certain yet.

Bhavesh

26 Dec 09 at 12:41 AM
Today’s news of Exxon buying XTO for $31 billion supports your argument of natural Gas as future clean energy. You are a visionary.

Thanks and regards
Saravanakanth, Salalah, Oman

Kalidas Says ….Tuesday, December 15, 2009
It has been established position since long to go or opt for Gas based stocks. This is why I had recommended with prices in the bracket GSPL (@28) Petronet (@38), Indraprashtha Gas (@105), GAIL (@210) etc. all of them have given almost 100% return in less than 12 months. They will still grow to multiply 3 to 8 times the original recommended value. (depending on whether they are producer or distributor)

Green is a new phenomenon taking shape and gaining momentum. The use of crude oil will be progressively reduced in favor of gas. Gas is self lubricant, so it needs least maintenance.

Not only the above gas producer or distributor, the companies making gas based appliances world over will perform well. Their business will grow @ 30% compounded for next 3 years to 5 years or so.

I was using in India beautiful gas stove called “flama” from Baroda, bought in mid seventy. Until now, it is still running well without any maintenance. In fact, ask your self. How many times did you repair your own gas stove in last 20 years? Rarely will be your answer.

Gas is easy to transport. Being lighter than air, and self lubricant, it never clogs, and transported over thousands of kilometers at fraction of a cost.

No need to go for solar power or wind power which need electricity storage medium. The gas can be compressed (CNG being used in Auto = Compressed Natural Gas) liquefied (used in gas cylinders known as LNG = Liquefied Natural Gas), emits less smoke and causes less health hazards. If one uses Petrol or Kerosene, its fumes will cause TB or Tuberculosis or even cancer – Gas will not.

This is why almost all leading petroleum companies are selling their crude refineries (last one was Royal Dutch Shell who sold its refineries to Essar Oil) and going for Gas or similar exploration process.

Watch this sector for growth. At the moment, there is nothing negative about this sector. Go for Gas, it will fly your investments to dizzying heights.

P.Saravanakanth

14 Dec 09 at 12:26 PM
Dear Sir,

I came to know that CEO of PLL (Petronet LNG Ltd.) sold 25K shares on 10-Dec.09.

Will there be any impact on the share price? I’m currently holding 2500 shares @ 70.70 (average price).

Best regards,
NandakumarAS

Kalidas Says ….Tuesday, December 15, 2009
I do not go by such “insider selling”. it is small quantity and may be he had some obligation to pay such as Advance taxes which is due in December, 2009 or may be he is retiring and wants to buy some property. The value hardly comes to Rs 15 lakhs which is nothing for a CEO of such large company. His pay package alone may be substantially more than this sum.

Always provide link so that I could go through the news item properly. If you have heard, instead of read, please inform so that we could evaluate the authenticity of such news or rumors.

Nandakumar

14 Dec 09 at 12:05 PM

Financial Wisdom By Kalidas