Ladies and gentlemen, good day and welcome to Petronet LNG Q1 FY26 earnings call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Probal Sen. Thank you, and over to you, sir.
Thank you very much, Bhavya. This is Probal from ICICI Securities. We welcome you all to the post-Q1 FY26 call of Petronet LNG Limited. We have with us senior members from Petronet LNG's management, including Mr. Saurabh Mittal, the Director of Finance and CFO. Mr. Rakesh Chawla, GGM and President, FNA. Mr. Gyanendra Kumar Sharma, GGM and President, Marketing. Mr. Vivek Mittal, CGM and VP Marketing. Mr. Debabrata Satpathy, General Manager, FNA. And Mr. Vikash Maheswari, Deputy General Manager, FNA. We would initially start with opening remarks by the management, then on to the Q&A. So without further ado, I would hand it over to the management. Over to you, sir.
Yeah, good morning, and thank you, Mr. Probal. Good morning to you all. As compared to the previous quarter, Q1 FY25-26 has been a good quarter for us in terms of operational performance. Delving on the financial highlights, I would say that profit before tax stood at INR 136 crore compared to INR 1446 crore in the previous quarter, and INR 1520 crore in quarter one of the previous financial year. PAT stood at INR 851 crore compared to INR 1070 crore in the previous quarter, and INR 1142 crore in quarter one of the previous financial year. A major highlight is that net worth crossed INR 20,000 crore, reaching to INR 20,233 crore as of 30th June, up from INR 19,382 crore as of 31st March 2025. In terms of LNG volumes, Dahej terminal, our flagship terminal, processed 207 TBTU, registering a growth of 10% compared to 189 TBTU in the previous quarter.
The volume processed in Q1 of the previous financial year was 248 TBTU. Overall volume processed during the quarter was 220 TBTU, registering a growth of 7% compared to 205 TBTU in the previous quarter. The volume processed in Q1 of the previous financial year was 262 TBTU. The throughput improved compared to the previous quarter due to stable LNG prices, efficient operations, and higher capacity utilization. The sequential growth demonstrates resilience in a volatile energy market. We are pleased to announce that the Board of Directors has in principle approved and enhanced investment of ₹6355 crores for setting up a 5 MMTPA land-based LNG terminal at Gopalpur Port, Odisha, marking our first greenfield LNG project on India's east coast, transitioning from the earlier 4 MMTPA FSRU-based plan with financing through debt and equity and a targeted completion timeline of approximately three years.
PLL had also issued a request for proposal for financing a rupee term loan of INR 12,000 crore for financing the CAPEX program. We remain committed to strategic capacity expansion, rigorous cost optimization, and market-aligned growth. By harnessing our operational excellence and advancing key projects, we are well positioned to sustain and strengthen our leadership in India's LNG sector, delivering long-term value to all our stakeholders. Thank you. I would now request the Q&A to start.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, in order to ensure the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the queue. We will wait for a moment while the question queue assembles. The first question is from the line of Param Vora from Trinetra Asset Management. Please go ahead.
Good morning. Thank you for taking my question. So what I wanted to ask was that how is the company managing global LNG price volatility and geopolitical risk, especially in terms of long-term supply contracts?
So I would request Mr. Vivek Mittal to briefly answer to this query.
Thank you, sir. So of course, our contracts are linked to oil prices. So oil prices have not been very volatile. In fact, they have been subdued. So they are holding in the range of $65-$70. So we don't see any risk or any challenge from the geopolitical side. Of course, the spot prices have been slightly volatile, but it's still range-bound.
I think if you see spot prices though, as compared to the alternate fuel, might be on the upper side, but still we would say they are not hovering somewhere which we witnessed two years back. So the LNG market is quite stable now.
So there are no challenges we are seeing from that side.
Okay. And as sales growth has been soft over the past five years, what are the new strategies being implemented to reignite the top-line growth?
The demand is a function of various factors. So this quarter, if you look at it, there was no demand from our sector and fertilizer sector compared to the Q1 of FY24. So that's the reason we see a decline in demand in this quarter. But otherwise, if you look at over the previous quarter, the demand has been pretty stable and robust. Overall, we processed 261 TBTU, sorry, 220 TBTU this quarter compared to 205 TBTU in the previous quarter.
Okay, okay. Thank you. I'll wait back in the queue.
Thank you. The next question is from the line of Maulik Patel from Equirus Securities. Please go ahead.
Yeah, hi. Good morning and thanks for the opportunity. A couple of questions. One on that recent agreement you signed with Deepak Fertilisers for what, 26 TBTU or approximately 1.1 million. Is that and can you just tell me start date? And you mentioned that also 20% additional revenue option is there. So please, I mean, just detail that. And within that, is the pricing or the regas tariff similar to what the current customers are paying?
So the pricing is absolutely the same what we charge under our other long-term agreement. And the volume is minimum 0.5 million tons. We're starting somewhere between May to I think the press release was very clear. So between May to July 2026. And there is a potential for another 20%, which means depending on how much volume they get from suppliers, it can go up to 0.65 million tons, roughly.
Got it. Got it. And we understand that Dahej has been working there, Dabhol, in this monsoon. Historically, you've been getting around one million ton kind of additional volume during the monsoon months when Dabhol doesn't work. Do you have any—I mean, is that trend continue, or it was just only in June they got some volume and July they are back to the average? Any clarity and thoughts on that side?
See, this may be a cyclical or maybe temporary phenomena. Otherwise, Indian market, the way the gas market is growing, there is enough ample opportunity for every one of us. And that's the reason we are expanding our terminal. And you would have seen the recent contract which we have done with DFPCL Group Company. So Dahej is a preferred terminal considering multiple factors. It has the connectivity, the storage capability, and all. So.
No, no, sir. My question is that will this one million tonne this year, it will not be there, or do you think it will be some 0.6, 0.5, 0.4 will come this year?
Market demand is growing. India's demand is bound to grow, and it is growing also. So we don't see a new terminal coming up for expansion or running of Dabhol around the year makes any significant difference to operations of the Dahej terminal.
Okay. So the last question, any update on that Qatar extension? Have you signed anything with them? Off-takers? And what is the progress and update on that side, sir?
As we mentioned last time also, the deal we have signed with Qatar is based on the assurance that the volume will be obtained by GAIL, IOC, BPCL in a predetermined ratio. So that commitment still holds. The downstream agreements are being worked upon. We are trying to find what is the best and optimal solution to sell these volumes. So those discussions are ongoing.
Any timeline to that?
Not at this point of time. We cannot.
Got it. Thank you and wish you all the good luck.
Thank you. Before we take the next question, we would like to remind participants to press star and one to ask a question. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Yeah. So the first thought is on the slowdown we saw in the first quarter. So how is the demand from the fertilizer and power sector for this quarter? And how do you see the trending demand for FY26 given that there seems to be a slowdown in the overall gas demand, particularly because of the competition from alternative fuels?
So Debabrata Satapathy would answer this question.
Yeah, Mr. Ramesh?
Yeah. So your question was on the competitive fuels, basically how the demand scenario would be.
Yeah. And that, and how do you see the demand for this quarter? Because last quarter was down compared to the year-ago quarter. How do you see the consumption growth in this quarter compared to the year-ago quarter?
Yeah. So basically, the demand from the last quarter, as you see, it has started recovering. The overall throughput from our Dahej terminal has been 10% higher than the last quarter. And at an overall level, the company has done a 7% higher. The thing is that although these long-term prices, as it has been told already, the long-term prices that are crude-linked, that are remaining at a very, very affordable level for the Indian market, that long-term throughput has also gone up. And there is still a difference between the long-term and the spot prices. Actually, that is dragging the overall demand as per the market scenario right now. So what we foresee is that in the current year, probably that kind of difference could linger on for some time.
But from the next year onwards, from CY26 onwards, with the availability of ample LNG in the global market, basically that issue will also be sorted out. That is what we are looking at.
Okay. So the next thought is, can you give us the details of the inventory and trading impact, if any, and the regas tariff?
The inventory gain was INR 42 crore in this quarter, and trading gain, because of the current market pricing scenario, the trading gain was not there.
What about the regasification contribution?
It is INR 643 crores.
645 crores. Thank you very much, and I'll join with you.
Thank you. The next question is from the line of Varatharajan Sivasankaran from Antique Stock Broking. Please go ahead.
Hi. Are you audible?
Yes.
Yes, sir. You're audible.
Yeah. So the Kochi terminal utilization seems to have come down a little bit. Any specific reason for that?
No, it's a common phenomenon for the last quite a few quarters, as you have seen, and what we have been telling all this while is that Kochi, we are expecting the utilization to go up once the pipeline connectivity is set up, and we expect that by the end of this calendar year, or maybe at the most by the end of this financial year, the pipeline is going to come up, which is being laid by GAIL, and once this connectivity is set up, the utilization is going to go up.
Currently, can you be in a position to give us who's taking what from the Kochi terminal?
Sorry?
Currently, can you have a share of who's taking what from Kochi terminal, MRPL, or BPCL, who is taking what kind of volume they are taking?
Okay. So I would say major offtaker is obviously BPCL from Kochi. And to supplement my answer, I would request Mr. Gyanendra Sharma to carry on with this conversation. At Kochi, as they also have informed, major is BPCL, its consumption refinery, as well as it has its customer. And other, GAIL and IOCL are also providing gas supplies to fertilizer and refinery. Other.
Any volume details? Whoever is in a position to provide. Any volume details you are in a position to share?
Customer, because they are not our direct customer, it won't be appropriate for us to speak on behalf of our off-taker.
Thank you.
But the only thing we can add is that this quarter, FACT took a shutdown for almost one and a half months. So that's the reason you see some decline in the volume. They consume around one million MMSCMD. So there was a small decline on account of that. But that was the same case in the last year's first quarter also. So compared to last year's first quarter, the volumes are quite similar.
Thank you.
Thank you. A reminder to the participants, you may press star and one to ask a question. The next question is from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Yeah. So two questions. Firstly, on this Gopalpur terminal, is there a minimum offtake kind of an assumption also before going ahead with it? Or even if it doesn't happen, you'll start construction? Because you've given a three-year timeline. So would you start work right away or probably get some offtake first?
So definitely, discussions are on with the probable offtakers. And the major offtakers will be our promoters only. But we will not wait for finalization of the offtake agreements because that will delay our project. So simultaneously, we will start construction of the terminal and at the same time have parallel discussions with our offtakers.
Okay. Fair enough. The second question is on this Gorgon Phase 2 volumes. When is it starting and how much would be the volumes?
This is likely to start towards the end of this financial year. And 1.2 MMTPA is the contract. And initially, it will be 0.5 MMTPA.
That will be for how long?
15 years.
No. 0.5 will be for how long?
For two years.
It will ramp up to 1.2.
That's right.
Okay. Thank you so much. All the best.
Thank you. Participants, to ask a question, you may press star and one. The next question is from the line of Tanay Koteja from Nuvama. Please go ahead.
Hey, hi sir. I just wanted to make a refresher regarding your accounting policy for the provisioning part on the UOPDs.
So, Saurabh, if you can, please.
See, as you know, the use-or-pay dues are part of the contractual obligation by the off-takers. So this is being recognized. However, as a prudent accounting practice, provision is being done. So what we are doing is, first year when the amount is not paid, we are making 20% provision. And next year, 30%, making it cumulatively 50%. And then the third year is where this flexibility period is over, we are making the balance provision of 50%. So making it cumulatively 100% in three years. This is as per the practice, as a prudent accounting practice, we are following. And as you know, calendar year 2021 use-or-pay amount was received by us in last year. So ultimately, this provision is only accounting practice. The company is already confident that this is contractual dues, and we are likely to get full money during this flexibility period.
If somebody wants to bring volume, they are bringing.
All right. Thanks. That answers my question.
We have already received the full money or the volume, whatever the off-takers like, because INR 360 crore and odd rupees was paid by the off-takers.
Okay. All right. Thank you.
Thank you. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Yeah. Thank you for the follow-up. So when you discuss these additional volumes discussed with Gorgon, the initial Phase 1 was about 2.5-2.6 million, if I understand correctly, right? And that has to be taken in Kochi. So if you take the 1.2 million Phase 2, overall, you got an aggregate gas supply arrangement with Gorgon of about 3.5-3.7. Is that understanding correct?
No, no, no. I don't think your understanding is correct. It is very clear the contract is for 1.2 million per annum, metric ton per annum. And it's going to commence from 2026. It will go on till 2036. And the existing contract is for 1.42 million.
Yeah. That's what I meant. So that means.
Yes.
2.6. So that means the Kochi has the potential to process 2.6 million once the pipeline is connected, right?
The potential is much more. It's a five million metric tonne per annum terminal.
I understand that. But in terms of the gas supply sourcing arrangement, you can go up to 2.6. And for the rest, you are to.
Yes. So far as long-term contracts are concerned, you are correct. It's about 2.63.
Yeah. So on this accounting which you explained, so whatever provision you're making right now, it will be actually treated as cash outflow, right, in terms of cash flow. And then when it is over, it will come back as cash inflow. Or is it just a non-cash entry? How do we see the cash flow impact for this provision?
See, the accounting provision is a non-cash flow entry because already we have recognized the income in your books. So this is only a provision only. This is not a cash outflow type of thing.
Okay. Okay. Fair enough. Thanks a lot. Appreciate it. Thanks.
Thank you.
Thank you. The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund. Please go ahead.
Thank you, sir, for this opportunity. Could you update us on the status of expansion at Dahej from 17.5 MMTPA to 22.5 MMTPA? Also highlight the tank that we have commissioned. How was it utilized during the quarter? And what was its contribution to the margin? And in terms of the jetty, where are we at this point of time?
Okay. So I'll start in a reverse manner. The jetty construction is going on as per the schedule. And so far as the regas expansion capacity is concerned, there were some slippages because of the monsoon and as well as the war-like situation which had emerged. And because of that, there were enhanced security concerns from both the government side as well as from our side. So it has slightly impacted the construction work. But we don't see much of a delay. So by the end of this calendar year, we should be able to complete the construction and start the commissioning exercise. And by Q1 of next calendar year, we should have a stable, enhanced capacity terminal working.
Right. What is the target timeline for the jetty at this point of time?
The third jetty you're talking of?
Yes, sir.
2027. And as you know, it will be capable of handling LNG, ethane, and propane for 2027.
Right. And how was the completion of tank utilized during the quarter? What was its contribution to profitability? We were expecting some trading volume out of that.
See, the tank is only a support system to the regasification facility. Once the regasification facility comes on stream, then only we can say how much additionally we have been able to utilize. Tanks have overall added to the flexibility which we provide to our capacity holders or the volumes we bring in.
Sure, sir. Could you also highlight the developments on the PDH-PP project implementation?
Yes. Again, I would like to state that the work is going on full steam, and it is on track, so we expect this plan to come up as per schedule.
Any more granularity in terms of what you were able to share in terms of the particular milestones that we have achieved during the quarter? And what are the target milestones for the Q2?
Okay. So we have actually placed almost out of the 11 LLIs and 13 packages. We have almost floated tenders of all the packages and LLIs except a few where we feel that the time is not yet ripe enough. And we have also awarded a few critical long lead item orders. So that's where, as of now, we stand today.
Sure, sir. Thank you.
Thank you. A reminder to the participants, you may press star and one to ask a question. The next question is from the line of Somaiya from Avendus Spark. Please go ahead.
Yeah. Thanks for the opportunity. I hope I'm audible.
Cheers.
Sorry. I missed you. Thank you. I missed the initial part of the call. Sorry in case the question gets repeated. Sir, the CAPEX outlook for the next couple of years. And how much?
Sorry to interrupt. Sir, your audio quality is not clear.
Yeah. I hope it's better now. Sir, just wanted to understand. Yeah. The CAPEX outlook for the next couple of years and also what is the amount that we have spent on PETCHEM so far, and how we plan to face the PETCHEM spend over the next two, three years. That's the first question.
Okay. If you talk about this quarter, the PETCHEM spend is around INR 500 crore up till date. And going forward, we have lined up a CAPEX program of around INR 30,000 crore. And out of which, the major share or the lion's share is allocated to the PETCHEM plant only. And that is what I think I can share as of now.
Sir, the plans for current year and next year, sir, in terms of what will be the CAPEX?
This year, we have targeted CAPEX of around INR 5,000 crore.
This will be majorly for PETCHEM, sir?
It will be for the third jetty for petchem and also some of the other projects that we have taken up. We have got the in-principle approval of Gopalpur terminal. We plan to spend around INR 300 crore on that. Then we have a corporate office building in Nauroji Nagar coming up. We plan to spend about INR 100 crore there. Then CBG plants, we have been mandated by the ministry to put up around 25 CBG plants. We have plans to spend around INR 100 crore there. There are other small items like small-scale LNG and LNG bunkering facility at Kochi. These are the major items which I can spell out right now.
Understood, sir. So we should expect a similar underwrite next year also in FY 2027 also, INR 5,000 crore?
It's going to be even higher. It's going to be even higher. And that's precisely the reason we have floated this RFP for rupee term loan of INR 12,000 crores.
Understood, sir. You mentioned this quarter, we have spent INR 500 crores on PETCHEM. So cumulatively, so far, what will be the spend on PETCHEM?
So that's what I'm telling. Till the end of this quarter, the cumulative spend is around INR 500 crore.
Got it, sir. So second question on the Gopalpur terminal. There's this earlier thought of an FSRU now to a land-based and also 4 MMT to 5 MMT. If you could just help us, I mean, the broad thought process, what led to a change here? That is one. And second, also, if you could help us understand the pipeline connectivity in and around the plant facility. So do we have already pipelines in place for offtake, or we are waiting for some more connectivity there?
Okay. So, Gopalpur, first, I would like to say that Gopalpur is away from a major trunk pipeline by about 35 odd kilometers. And once we put up this pipeline and connect it to the trunk pipeline, our offtake will not be an issue. And secondly, the shifting of plan from FSRU to land-based terminal makes sense because we have observed that the cost of a floating vessel-based terminal has gone up by a huge amount. And the savings in OpEx that we will make if we go for a land-based terminal, it makes sense definitely for us to take a decision in favor of shifting from an FSRU to a land-based terminal.
Got it, sir. So you mentioned 35 kilometers you can get connected to that main trunk pipeline. So that trunk pipeline, which are the areas that it is getting connected to? I just want to understand which will be the potential set of customers, larger customers like refineries or steel plants or where will we be?
Once we actually, see, GAIL has already one pipeline from Srikakulam to.
Angulserika Kulam.
Angul, Srikakulam. Yeah. Pipeline is already there. So from Gopalpur, if we set up this pipeline and connect it to this main trunk pipeline of GAIL, we will have access to north whereby we'll be connected to the national gas grid. And we can reach up to the northeast in Bihar, West Bengal, Jharkhand. Entire area will come under our hinterland. And down south also, the pipeline can cater to, if it is further extended up to Visakhapatnam, it will cater to the refinery and then some of the big steel plants and aluminum plants of Hindalco. It's already there. So they could be the major consumption centers for our terminal.
Got it. And what will be the break-even utilization for this 5 MMT facility?
Okay. So it's going to be, if you see, except Dahej, none of our terminals in India are operating at more than 50% right now. But yes, going forward, we foresee a growth of around 6%-7% in the gas consumption. So maybe once this comes up after three years, three and a half years, because we have projected this three-year timeline from the date of getting our EC. And we are expecting this EC in a couple of months' time. So once this comes up, maybe from CY 2028, 2029, we'll start with a capacity of 20% utilization and then slowly we'll ramp it up to around 80%-90%.
Okay, sir. One last question. The trading gains and inventory impact in the current quarter?
Inventory gains were INR 42 crores. There was no trading gains.
Got it, sir. Helpful. Thank you, sir.
Thank you. Participants, to ask a question, you may press star and one.
Yeah. While the queue assembles, this is Probal here, sir. I can answer a couple of questions. One was on the broader LNG market that we are seeing at this point of time. What kind of we've been hearing about the kind of capacities that are coming up globally in terms of liquefaction. And obviously, Indian players have also tied up a lot of capacities for offtake. So how do we see the market evolving for Indian customers? What kind of mix do you see between long-term and short-term? And what kind of pricing scenario do you see?
Thank you. I think you have asked a very valid question. If you see in the next three to four years, around 180 MMTPA capacity is going to be online and LNG supply side. And the major markets targeted, India will be one of them because we know Europe and Japan are quite saturated. India, China are going to take these major capacities. Considering that a lot of supplies coming in, the prices are expected to be more comfortable or more affordable, meaning that the demands will catch up. So India's projection next by 2028 to 2030, the LNG consumption is expected to be more than double. Okay? And that fact, India needs to keep pace with the infrastructure. It should not so happen that prices are affordable and India is lacking the import infrastructure. And that's the reason one of the key PLL is coming up with Gopalpur.
And at the right time, around 28, the terminal will be available online. So it is like, and as you know, multiple pipelines are coming, Nagpur to Jharsuguda, Angul, Srikakulam. JHBDPL is already there. Northeast grid is getting completed. So the major demand center, the maximum growth center, I would say, will be that part of eastern coast of India. And PLL will be ready to take care of that supply.
All right, sir. Moderator, can we take one last question?
All right. Thank you. The next question is from the line of Mayank from Morgan Stanley. Please go ahead.
Yeah. Thank you for the call, sir. I didn't join the entire call. I think there were some logistical issues. I just had a question around the terminal that you were just talking about. If you think about it from a perspective of single nation, single grid that the PNGRB has been talking about, how do you see this terminal kind of playing out for you? Could it be the next Dahej for you, or could it be even bigger? How should we think about that?
You have rightly answered. It will be next Dahej. As I told in just a couple of minutes back, the kind of pipeline network coming up there, it will be just parallel to what Dahej has presently, five pipelines we have here and similar kind of connectivity Gopalpur is expected to have. And the kind of demand, if we see, till now, the western part of the country was growing gas consumption. And as we know, Gujarat, more than the global average, 24%-25%. It is now time for eastern part of the country, number one. Number two, if you see the demand to be catered from central part of India to the eastern part of India, need to have a proper distribution of regasification terminals so that the pipeline hydraulics is maintained.
Also for the energy security point of view of the country, it is very important to have diversified portfolio of terminals. So I hope this is likely to be next Dahej.
Sir, just to follow up on that, if I may, because Dahej is a very big advantage of being the first mover and lower CapEx per unit. Do you see that advantage still remaining with Gopalpur, or do you think, because there are certain terminals which are already on the eastern coast, do you think that will be something there will be a bit of a competition that you have to worry about?
We are not bothered about competition. See, had it been so, then we would not have taken this call on Gopalpur. And PLL has some inherent advantages in terms of our experience of handling regas terminals for so many years, number one. And number two, we can also offer swapping of cargoes then to our offtakers from west coast to east coast. And then another point which Mr. Sharma has spoken about is very important. It's that pipeline hydraulics. So far as pipeline network hydraulics is concerned, it will give us an advantage to have Gopalpur terminal in place because there's a lot of industries coming up and as well as operating nearby, which is definitely going to help this terminal to fare better in the coming years, despite having some other terminals nearby.
Got it, sir. Thank you.
Thank you. Ladies and gentlemen, this was the last question. I now hand the conference over to Mr. Probal Sen for the closing comments. Thank you, and over to you, sir.
Thank you, Bhavya. Thanks so much for everyone to make the time to attend the call. I would invite the management if they have any closing comments.
Thank you. And we hope to meet again soon with some more encouraging results. Thank you.
Thank you. Thank you very much, sir. Thank you, everyone. You can now log off from the call. Thank you.
Thank you. On behalf of Petronet LNG Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.