Very good set of results.And as guided by the management npas did not grow up, its fairly stable at 1.23%. The stock deserves a rerating…
The NPAs do not grow they suddenly appear for them. From a far cry of zero NPA company to 1.28% transformation was swift.
Disc: Sold some time back after RS Energy issue suddenly appeared.
i think expecting zero npa from an NBFC is too much of an expectation. As long as the NPA’s are controlled, it should be fine. RS energy and Koseema are both in their radar as per the management , and they expect both of these to be sorted out soon. The best part is the management is transparent and they said they will not wait to write off the NPAs till the time they get worse.
I m new to the forum and still understanding how to use this forum with the discipline it demands.
Can Some body throw some light How good investment will be PFS at this price.??? Shall we trust the management and believe NPA issue wont hurt anymore ???
At this price Dividend yield also looking good
Disclosure : Invested at higher price and looking to average
CONFERENCE CALL - from Capital Markets
PTC Financial services
Out of the total loan book, 45% is renewal 31% thermal, 5% hydro and roughly 20% others
PTC Financial services held its conference call on 11th February 2016 after it declared results for the December 2015 quarter.
Ashok Haldia - Managing Director & CEO addressed the call:
Highlights of the call:
In December 2015 quarter, total revenue increased 17% to Rs.248.06 crore against to Rs.212.03 crore in Q3 FY2015.
Interest Income grew 19% to Rs.233.38 crore against Rs.195.38 crore.
Net Interest Income (NII) grew 23 %, to Rs.110.22 crore.
Profit Before Tax (PAT) grew 28% to Rs.105.70 crore.
Profit After Tax (PAT) grew 27% to Rs.69.45 crore.
Yield on loan assets stood at 12.96% December 2015 quarter
Cost of borrowed funds reduced to 8.84% compared to 9.39% y-o-y.
Net Interest Margin (NIM) stood at 6.12%
Spread stood at 4.12%.
For the nine months ended December 2015, total revenue increased 57% to Rs.916.95 crore.
Profit from sale of investments stood at Rs.206.93 crore during the nine months.
Interest Income grew 23% to Rs.665.40 crore.
NII grew by 21% to Rs.306.55 crore.
Profit Before Tax grew 114% to Rs.460.90 crore.
PAT grew 136% to Rs.342.06 crore.
The profit, interest income and the loan book continue to reflect upward trend.
As a leading infrastructure finance company, the quality of assets continues to remain top priority and focus area.
The renewable energy space continues to witness increased action
Yield on loan assets stood at 13.13% during the nine months
Cost of borrowed funds reduced to 9.07% during the nine months compared to 9.37% y-o-y.
Nine months NIM stood at 6.05%
Nine months spread stood at 4.07%
As at December 2015 total outstanding loan assets grew 33% to Rs.7,795 crore.
Total debt sanctioned stood at Rs 13,492 crore as on December 2015.
Loss on foreign currency translation was Rs 17.30 crore during the nine months against Rs 12.77 crore.
Steps being taking in the country which will bring investment in power sector.
Industrial growth is yet to pick up in the Indian economy but the government is doing work to restart the capex cycle especially by the road and railways sector. The capex comes after time lag and capex will will happen.
We have very good national tariff policy which will be good for Indian power market.
Supportive regulations are also coming up.
Uday scheme launched by the center will also see benefits coming. This will take time frame of around one year.
Many states are agreeing to set up large solar power.
New Hydro policy is also being discussed which will give fillip to the India. Solar and Hydro can work in a better way compared to standalone Hydro and standalone solar. .
The company can be one of the large beneficiaries of the growth plans of power sector in the country.
India has been transforming in power and financial sector. This has thrown up challenges and opportunities for the company.
The company has started financing extension of power sector also.
In % terms NPA have come down because loan book has increased.
The company is monitoring its portfolio very closely.
PBT, if it excludes before sale of equity, it goes up by 54%.
Debt Equity ratio is healthy at 3.45.
Cost to income ratio is lowest in the Industry
CAR is also healthy 23.58%
Sanction stands at 13500 crore. 55% is for renewal energy. This has 2 affects. One is that renewable energy projects have good sanctioning ratio. Second is the renewable energy has very low stress.
This quarter has seen no extraordinary provision and no addition of NPA.
The management refused to do forecasting of NPAs because it is very difficult to do so. The company’s efforts is to see that the project does not go into NPA.
Gross NPA is Rs 400 crore and net NPAs are 286 crore. So Provision coverage is 25%.
The company does not expect any major addition to restructured assets.
Solar capacity in India is less than 7000 MW
Loan book as of now is Rs 7800 crore. Out of this 45% is renewal 31% thermal, 5% hydro and roughly 20% others.
PFS has been a stock with a very good future, with its dominance in financing renewable energy projects. With the Govt reiterating its resolve for huge capacity addition in solar power and the falling price of solar panels, the future of renewable energy and its proxy play - PFS appears to be bright. Moreover, technically too, the stock has given very good entry signals as can be seen from the daily chart of PFS.
Disclosure: As of now, I don’t hold any shares of PFS.
After crossing the resistance line, the stock traded sideways for a few days and ladt week there was a volatility breakout in PFS which is now @39 and at the nascent stage of uptrend. Those who have purchaded @32-33 levels are set to reap very good gains in PFS in the short - medium term. Best of luck to them.
Disclosure: unfortunately i could not invedt in PFS due to paucity of funds.
From Capital Markets - ANALYST MEET
Aims to diversify in to lending to non-power sectors
PTC India Financial Services (PFS) held its analyst meet on 17th May 2016 and was addressed by Pawan Singh Whole Time Director & CFO and Ashok Haldia MD & CEO
As per the management, while uncertainty and risks continue to remain in power sector financing, some of the measures on tariff policy, Uday scheme, availabitly of coal etc are very encouraging for the sector as a whole. The good news is that nobody is allowing the situation to make worse than the current levels, while lot of actions have been planned to improve the current situation.
Also as per the management, there are plans to convert the old smaller thermal projects of around Rs 26000 MW to super critical thermal power projects and to run the upgraded T&D line parallel to the generation stage of these projects. All these auger well for future of funding the power sector which is otherwise surrounded by uncertainties.
Total cumulative loan book as on Mar’16 stood at around Rs 8634 crore as compared to Rs 6379 crore as on Mar’15. About 44% is from renewable (wind and solar), about 30% is from thermal projects, about 5% from hydro projects and rest is contributed by other sectors.
Yield on asset stood around 13.07% and NIM stood at 5.98% and as per the management, NIM should hover around 6% level going forward, given the constant reduction in cost of funds.
CAR is around 21.8% and management is comfortable around level of 20’s.
Loan disbursement as on Mar’16 stood at Rs 3555 crore, up by 43%.
Total cumulative debt sanctioned stood at Rs 15074 crore, of which renewable now account for 53% of total sanction. About 75% of the renewable loan book being wind power and remaining solar power. Thermal Power accounted for around 23% of total sanction.
East Coast Energy project is a 1320 MW project in which PFS has invested around Rs 133 crore. There is a cost overrun in this project and promoters are not able to bring in their equity portion. The cost over runs has been approved by the lead institutions. PFS has received FIPB approval to swap its shareholding into share of holding company.
There are no further restructuring in the quarter and restructured assets stands around Rs 439 crore. As per the management, there are all standard restructured assets comprises of 5 accounts. Management is confident of receiving funds from 1 of the account very soon. So far provision of Rs 22 crore has been voluntarily made by the company.
Gross NPA stands at Rs 293 crore. Provisions made are to the tune of around Rs 93 crore. Net NPA stood at 2.35%. Net of Provisions, outstanding for Konaseema project stands at Rs 76 crore and Suvarna around Rs 84 crore and rest comprises of 3 more accounts.
The company has received Board approval to raise funds to the extent of around Rs 750 crore. While the mode of fund raising has yet not decided, management has indicated that they are not in a hurry to raise funds and it’s a gradual process.
Management has clearly indicated that while Power sector as a whole will continue to be its major financing stream, and emphasis will be on renewable energy, the company also intends to diversify and fund various projects such as Rooftop panels in Solar, Distributor Generators, Offshore wind projects, Last mile annuity based road projects, small thermal power projects, railways, ports etc.
Although I am still not invested in PFS, I am posting this for the benefit of those already invested in PFS at earlier indicated breakout level of 32…now PFS has almost completed the bottom formation on monthly, weekly and daily charts…the foundation for a long rally has been laid…in a matter of 1-2 weeks, the stock may finally start moving up…in a sustained upmove.
But if the NIFTY falls steeply and drags down PFS again to around 30 rupees level…then I may buy into PFS heavily…around 30 rupees, there would be virtually no downside risk and unlimited gains on the upside…but the uptrend may be slow and steady…hence PFS is a stock ideal for investors who can invest hugely and who are patient…in 1-2 years the stock may as well be in triple digits…
Another gem of a stock which appears to have completed the bottom formation process is Jammu And Kashmir bank…now at 67…with a rock solid bottom @ 57…and a initial target of around 90…
Unfortunately I am not invested in both these very good long term investment bets…as of now.
Thanks for your view. Is it oriented more towards the technicals?
I invested in PFS since its IPO and have observed it.
a. My view is that the business is doing well and is available at cheap valuations.
b. At current prices, it is available at an earnings yield of 17.5% (due to sale of its equity investment) and P/B of 1.2, both of which seem cheap considering the strong growth potential.
c. Its ROE has been low due to two reasons, one being NPAs (which seem to be in control now) and the other being money being locked up in its equity investments. ROE improved in FY16 (due to the sale of one equity investment) and should keep improving going ahead considering the increasing portion of debt financing projects and the company’s good spread and NIMs.
d. Also the company has an improving dividend payout and an yield which currently stands at 3%.
Having said that, there is probably a reason the market is not valuing it richly and may continue to value it poorly.
a. Overall, this sector is out of favour and presents considerable risks. With UDAY things may improve but markets may wait to see that happen. This sector does not present huge growth opportunities.
b. The assets in this business are ‘lumpy’ and present significant uncertainty. Unlike other NBFCs, say in MicroFinance or in Housing, PFS lends big money to smaller number of customers and even one or two projects failing results in a big hit to the networth. In MFIs or Housing Finance companies building an asset book is not as easy but it is more robust, and that may be the reason those companies are being valued at 4+ times book value.
c. I read recently (cannot locate the source) that the installed power generation capacity in India now matches the power demand. It is just that the distribution companies are not buying enough power from the generators due to their poor financial condition. With UDAY this should change. But going ahead, despite the government’s 100+ GW renewable target, growth opportunities may be squeezed.
These might be the reasons for PFS’ current valuations. I, however, continue to hold because I feel that the business is doing alright and the growth in book value alone should provide good returns (even without any P/B or P/E expansion), the NPAs are in control, the ROE is going to improve and maybe with improving perception PFS will catch the fancy of FIIs.
Prasunji: in financial stocks, I think it is preferable to go the technical way for investing. There is no way that retail investors like us can know the true picture as to whats going on. We just don’t have access to any data…even those working in the finance companies only have a vague idea that either things are good or things are not so good. If you talk to the manager of any public sector bank branch, he would have very little information on the overall performance of the bank.
I know a person who is the head of mid corporate branch of PNB…even he was unable to provide any sort of guidance about the performance of his bank.
I think we too can only go with the general broad trends…that things are bad, things are improving or things are going great. Other than that we have no way of knowing anything…you seem to be invested in PFS since a long time but you have no idea as to what the next quarter result is going to be like.
Therefore, according to me, the sector in which PFS operates was not doing well…modi sarkar is trying to revive it…and PFS seems to have formed a bottom and may start trending up…for a fundamentally good stock this much information is good enough for us to invest…afterall we can always exit if things start going bad once again…
Mehnazji: I beg to differ on the uncertainty point. In my view good financial businesses have the most predictable growth rates and I have developed this view because I have been an investor in Repco Home Finance and HDFC and have also studied Gruh Finance and most of the other housing finance companies. Though I have limited knowledge of the market, I have not found more linearly growing businesses. I think in these businesses consistency is valued higher than explosive growth. Ofcourse, I could be wrong but this point of view that has been profitable for me.
I agree with you about the broad trend getting better. And that is one of the reasons I continue to hold. Buying businesses cheap gives one the luxury of not having to worry too much about what the next quarter will look like.
But I would still be more concerned about NPAs in PFS than in Repco or Gruh.
Looking at the fundamentals and the way markets are perceiving/valuing a particular business helps me in building conviction. In this particular case, your study suggests that the technicals are also favourable. So all in all, maybe, its a good time to be invested in PFS.
I made my first investment in PFS as a techno fundamental pick…i have a stoploss of 39.70 and will try to scale up my investment in PFS if the stock starts rallying from here on…
Are you still holding? I think it has a good support at around 36
No…i have exited when my stoploss was hit @39.75…for me PFS is a fundamental as well as technical pick…so i sold when technicals turned down, even though fundamentals continue to be quite good…and for the record, i think the Quarterly numbers were not bad…maybe the stock will recover in the next few days…but till it recovers and shows strength, i will not buy it…i dont mind paying 3-4 rupees extra for buying strength…wont buy weakness when NIFTY appears to be due for a correction on monthly charts…
Some bad point you are miss to point out:
=> Its gross NPA rose to 5.83 per cent (Rs 528.89 crore) of gross advances as on June 2016, from 1.24 per cent (Rs 81.60 crore) year ago.
=> Net NPA too shot up to 4.53 per cent (Rs 405.72 crore) against 0.97 per cent (Rs 63.39 crore) earlier.
=> The provisions were at Rs 2.20 crore, up from Rs 1.20 crore year ago.
May be above points are creat pressure on stock price.
Agreed. The price action in the last 15 minutes suggested some buying action though. I think it might be an inside bar tomorrow.
Regarding the quarterly results, even i think it was pretty decent. (other than the NPA)
Whats your take on the rising NPA? Has the management clarified? I think UDAY scheme would be a trigger when its implemented in the future.I added some more today
Disc : Invested