Stock Market Result Update on PTC India for 1QFY2012

Stock Market Result Update on PTC India for 1QFY2012 with a Neutral recommendation.

For 1QFY2012, PTC India (PTC) reported net profit growth of 62.6% yoy to `45cr, aided by 17% higher traded volumes and higher rebate income of `23cr (vs. `3.5cr). The company benefitted as it retained a substantial portion of rebate (2% of billed amount) received from power sellers, which was not passed on to buyers (mostly Tamil Nadu SEB) due to delayed payments. PTC still has ~`500cr recoverable from Tamil Nadu SEB, which the company hopes to recover in the next two months. Management has maintained that no fresh power sale would be made to the SEB until the amounts are fully recovered. We maintain our Neutral view on the stock.

Operating profit up 71.5% yoy: PTC’s 1QFY2012 power trading volumes rose by 17% yoy to 6.7BU. Net sales fell by 9.8% yoy to `2,487cr due to the decline in average power selling prices. Operating profit grew by 71.5% yoy to `48cr, mainly aided by high rebate income.

Outlook and valuation: Going ahead, we expect PTC to witness healthy volume growth due to addition of ~1,300MW and ~4,600MW to its long-term trading (LTT) portfolio in FY2012 and FY2013, respectively. The company has till date signed PPAs and PSAs for ~15,000MW and ~5,400MW and is participating in various case-1 bids to sign more PSAs. We expect PTC’s top line and bottom line to witness a CAGR of 22.2% and 23.2%, respectively, over FY2011–13E. At the CMP of `76, PTC is trading at 11.6x FY2012E and 10.6x FY2013E earnings. We maintain our Neutral view on the stock.