Analyst Concall
Petronet LNG sees uptick in demand; FY26 capex INR 50 bln
This story was originally published at 15:22 IST on 28 July 2025
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--Petronet: Don't see risk from geopolitical side on long-term LNG costs
--Petronet LNG: See demand recovering in next quarter
--CONTEXT: Comments by Petronet LNG mgmt in post-earnings conference
--Petronet LNG: Demand recovered sequentially by 7% in Apr-Jun
--Petronet LNG:Overall throughput from Dahej LNG terminal up 10% QoQ Apr-Jun
--Petronet LNG: Difference in long-term, spot prices dragging overall demand
--Petronet LNG: BPCL major buyer of LNG from Kochi terminal; GAIL, IOC next
--Petronet LNG: Not to wait for offtake pacts to start Odisha terminal work
--Petronet: Slippages in Dahej expansion Q1 on monsoon, war-like situation
--Petronet LNG: Should complete Dahej expansion by end of December
--Petronet LNG: Hope to commission expanded Dahej unit capacity by Jan-Mar
--Petronet LNG: Targeting capital expenditure of INR 50 billion in FY26
--Petronet LNG: See FY27 capex higher than INR 50 bln
--Petronet LNG: Spent cumulative capex of INR 5 billion in Q1 FY26
--Petronet LNG:Barring Dahej, no other terminal in India operating above 50%
--Petronet LNG: See growth of 7% in consumption of gas going forward
--Petronet LNG: Hope to begin Odisha unit in 2028, 2029 with 20% capacity
--Petronet LNG: India LNG consumption seen doubling by FY30
By Pallavi Singhal and Sunil Raghu
NEW DELHI – Petronet LNG Ltd. expects demand for liquefied natural gas to recover in the ongoing quarter, after a 7% sequential increase in Apr-Jun, the company's management said in a call with analysts after the earnings was announced on Monday. Throughput of the company's Dahej terminal rose 10% quarter-on-quarter in Apr-Jun, the management said.
Noting that gas prices had fallen from their peak, the management said it does not see geopolitical risks affecting the cost of liquefied natural gas in the long-term. However, the price difference between long-term contracts and spot prices remains a key drag on demand.
Spot prices of liquefied natural gas have been volatile. They were up 11% on year in the Apr-Jun quarter, averaging $12.4 per million British thermal units, Motilal Oswal Financial Services said in a report. However, going forward, Petronet LNG expects a 7% growth in gas consumption.
The company plans capital expenditure of INR 50 billion in 2025-26 (Apr-Mar), with allocations for its Dahej terminal, Kochi terminal upgrade, new corporate offices, and the proposed Gopalpur LNG terminal in Odisha. As much as INR 5 billion has already been spent in the June quarter, the management said. With natural gas demand in the country expected to double by FY30, the management sees capital expenditure in FY27 rising even more.
The Gopalpur terminal, which will see an investment of INR 30 billion in FY26 and over INR 63 billion in total, has been redesigned to be land-based with a capacity to process around 5 million tonnes of gas per annum. It was previously planned as a 4-million-tonne floating storage and regasification unit. The management expects the terminal to near completion by 2028-29. The port located at Ganjam district in Odisha will help the company establish presence on India's east coast and help meet the gas demand in eastern and central parts of India, they said. The management expects to start the terminal at 20% capacity and ramp it up to 80-90%.
In the June quarter, the Dahej terminal saw a dip in LNG volume from the previous year, but was up on quarter, the company said. Its flagship terminal processed 207 trillion British thermal units in Apr-Jun, compared to 248 trillion British thermal units in the same quarter last year and 189 trillion British thermal units in the trailing quarter. Overall, Petronet LNG processed 220 trillion British thermal units across all its LNG terminals in Apr-Jun, down from 262 trillion British thermal units in the same period last year.
Besides Dahej, Petronet LNG operates a 5-million-tonne per year terminal at Kochi in Kerala, which runs below capacity due to limited pipeline connectivity. The management said it expects the terminal's utilisation to increase once pipeline connectivity is established.
The LNG market is expected to see about 180 million tonnes per annum of new capacity coming online in the next 3-4 years, the management said. India is likely to be a major market for these supplies given the saturation in Europe and Japan, they said. With increased supplies, prices are expected to be more affordable, driving demand growth.
Expansion of Petronet LNG's Dahej project faced some issues in the first quarter due to early onset of the monsoon season and a war-like situation between India and Pakistan, which led to increased security concerns, the management said. Despite these challenges, the company expects to complete the expansion by the end of December and commission the enhanced capacity in the Jan-Mar quarter.
The company said Bharat Petroleum Corp. Ltd. is a major buyer of LNG from its Kochi terminal and that it expects GAIL (India) Ltd. and Indian Oil Corp. Ltd to follow suit. BPCL procures around 1 million standard cubic meters per day of natural gas from the Kochi terminal.
Petronet LNG reported an over 25% year-on-year fall in Apr-Jun net profit to INR 8.51 billion due to weak gas demand. The bottom line was below the Street's expectation of INR 8.70 billion. Its consolidated revenue fell 11.4% on year to INR 118.80 billion. From the trailing quarter, the company's net profit fell over 20% while revenue declined 3.5%.
At 1511 IST, shares of Petronet LNG were flat at INR 301.50 on the National Stock Exchange. End
US$1 = INR 86.50
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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