Ptc india ltd

PTC India has come out with excellent results for q1 fy 15. Revenues have gone up from 2768 crores in q1 fy 14 to 3690 crores in q1 fy 15.

Net profits have gone up from 30 to 43 crores.

FY 14 eps was 8.5 per share.

Attached chart shows a breakout from a long rectangular consolidation and a double bottom formation at 38-39 levels. Breakout from double bottom has been confirmed by stock price breaking above the interim resistance of around 80. After sharp rally the stock price came down to test the earlier resistance levels of 80 and took support and then seems to have resumed its uptrend.

Pattern targets are 120.

comments on chart.

disc: Invested (techno funda bet)

FY 14 eps was 8.5 per share.

**This is stand alone EPS. Consolidated is 12.19. Total market cap is around 2600 crores. Also it owns 60% of PTC finance. which mean additional 1440(2400cr. market cap of PTC) crore.

Hence the company which earned a profit of 447 crore(Consolidated) in FY 14 is available at net valuation of 1150 crores.** By the way there are other subsidiaries as well.

It’s standalone number…consolidated will be quite higher. for example add 60% profit of PTC finance.

PS: 5% of portfolio since last 6 months.


Point & Figure charts are in agreement with your analysis with Bullish support line at 80. A double top has formed recently giving a buy signal.

P.S. Everybody is advised to do their own analysis. I’m still learning point and figure charting analysis.

Disc :- Invested (P&F)

thanks nikhil for the updates on ptc ltd.

Consolidated picture seems even more intersting. :slight_smile:

I didnt think PTC fin contributed so much to the bottomline. Its a pleasant surprise.

Hi All,

Anyone has any idea about whether PTC will get impacted by SC’s decision on coal block deallocation. If yes, by how much and when will the impact be felt? I had called investor relations guy Varun Sethi regarding the same. He said they r doing calculations and will get back to investors on this soon. I also checked about whether PTC will further contest the 50 cr penalty imposed by a court on it regarding the non fulfilment of a PPA by a power plant company. He said its an old case and they will contest it too.

Why PTC India is falling, i guess everything is going good. NPM/RoE/RoA are going up, PFS too is doing well, power sector reforms r taking place so why it is falling?

Curious case of PTC India.

On Standalone basis,

Stock price - 55 in Jan 2005. Netprofit of FY04 = 24 cr

Stock price - 93 in Jan 2015. Net Profit of FY14 = 240 cr

Profits up by 10 times by Price up by < 2 times.

Any reasons for the same?

Call was addressed by Mr. Deepak Amitabh MD. Key highlights by Capital Mkt;

Short term market is volatile as the contracted power could not flow due to Grid constraint. Nearly 60% of the contracted short term power in April-Dec’14 could not flow. This led to a reduction of 15% in short term volume flow to 4373 M Units YoY and overall volume stood at 7773 M units in Dec’14 quarter down by 5.6% YoY.

Management expects the volatility to continue in short term volume trade for next couple of quarters atleast. There is a mismatch between transmission capacities and generation capacity both existing and the new capacities that are coming up. For example in Jaipur and in States of Kerala, Tamil Nadu, Transmission lines are not completed due to environmental issues and new generation capacities are already ready. Further due to Grid collapse issues in 2013, Grid are behaving very cautiously and are not ready to load additional power in inter grid connectivity.

As per the management, Utilities health is improving but there is a transition period. Some blocking in short term and in medium term will be seen in FY 2016. So overall, there will be some pressure in overall volumes for the company in next couple of quarter’s atleast.

Of the Rs 250 crore due from TNSEB, Rs 220 crore to be paid by TNSEB in March 2015 quarter as duly decided by the court. Balance Rs 30 crore, parties need to seat and settle it out. There will be some surcharge income, but that has not been finalized.

Demand from Bangladesh has come down during the quarter.

Long term power supply trading margin is not capped by CERC. Realization for long term power is better than short term. The margins hover around 7-8 paise on an annualized basis. So far, 11500 MW long term contracts are tied up

The company has made a provision for Teesta Urja project where in it will have about 6.9% stake post divestment of its some stake to Sikkim Government. The company made a provision of Rs 6.92 crore and an additional provision of Rs 26.69 crore on the balance of its holding, which can be reversed, if things improve from hereon.

Hello All,

Is this the active thread for PTC India?

If yes, then can VP moderators/seniors guide or provide expert comments on this stock?
This stock has brilliant fundamentals (around 20% ROCE over last 5 years, almost negligible debt), good growth and too attractive on valuations. PE of 7.5 and PB of around 0.7. Why this stock is kind of neglected both in price and in VP forum?

PTC has declared Rs 4 as final dividend for year 2017-18. Effective date yet to be published. On current Market price of Rs 75~76, dividend yield is around 5.2%. This dividend yield is almost similar to post tax FD returns.

discl: invested

HSBC Mutual fund has now taken position in PTC. They have acquired 15 lakh shares in month of October. In total, Mutual fund houses have increased their shareholding in PTC.

Sector No. of Funds No. of Shares
18-Oct 18-Sep 18-Aug 18-Jul
Energy 32 4,37,91,894 4,31,61,889 4,32,22,926 4,83,19,701


Fidelity has also been buying. Their stake now exceed 8%.

1 Like

Dear Sundeep, really an informative article. Really impressed.
Can you please also add how the stock is expected to behave in next few years after all the subsidiaries are sold.

Kind Regards,

1 Like

As per the most recent statistics, India’s per capita electricity consumption is about 1181kwh. In comparison China’s consumption stands over 4400kwh in line with most of western Europe. Germany consumes over 6000kwh while USA consumes over 12000kwh.Even Vietnam consumes over 2200kwh / capita.

Thus, it stands to reason that growing per capita income leads to higher electricity consumption. Therefore, I see electricity consumption growth as a secular trend for India.

Additionally, widespread adoption of open access and privatisation of discoms are both catalysts for trading volumes. Therefore the base case outlook is that 12 to 14% p.a. volume growth should continue and possibly accelerate with reforms and shift of manufacturing activity to India.

1 Like

Excellent study. Invested for long term . Price drop of 14% since investment but dividend makes up for the loss.

1 Like

Good results

1 Like

Q3 results announced on 12th Feb, were also very good. Here’s the link :

Any clues on why the stock has reacted so sharply today ?


How do the boarders see the Q4 results? Standalone result seems to be on track except for exceptional impairment for PTC Energy. Even if PTC Energy is sold with 50Cr. impairment it should be a good outcome as it reconfirms the notion that PTC would continue to focus on asset light business. PTC Finance is a problem which as per PTC Finance management will not need incremental equity for coming 2 -3 years.

Assuming power trading segment continues to grow and PTCs upcoming exchange does not require very high capex, the stock seems to be good for coming years.

Disclosure - Invested so views are biased.

1 Like

Dont see much interest in PTC India compared to significant interest in IEX. Though PTC is largest trader on IEX and can shift that volume to its exchange by year end.

PTC India generated ~400 cr net profit on standalone basis while it can generate ~1000 - 1500 cr. by selling PTC Energy (quite likely SJVN likely to buy as per market report) while PTC Financial may not be sold till it shows consistent performance (big risk to PTC India).

PTCs 25% stake in exchange may be valued at ~500 -1000 cr. at market cap of 2 -4000 cr (significant discount to IEX).

Thus PTC India can generate ~2000 cr. of cash out of which a good portion will be provided as dividend as per management, which provides a back stop to market cap.

If PTC can continue to generate 400 cr kind of net profit and provide 50% of it as dividend as per its policy, it seems to be a good value at current price.

It will be good to understand other views.

Disclosure - invested with PTC being a good part of portfolio, views are biased.


PTC India declared results yesterday. Consol PAT grew 36% and Standalone PAT grew 13.6%.
Stock available at 6.2x TTM EPS (Consol). Here’s the link :

However, the key points to note from these results are :

  1. PTC India Financial Services (PFS) seems to have cleaned up its book and will possibly now contribute positively to consolidated profits. This will accelerate profits of PTC India. Here’s why : PTC owns 4,17,450,001 shares of PFS. This translates to 1.41 shares of PFS per share of PTC India.
    Therefore, if PFS generates Re 1 of EPS, PTC’s consol EPS will grow by Rs1.41.
    Hence if PFS’s profits grow from here on, PTC’s EPS growth will be SUPER CHARGED.
    Conclusion : PFS which was considered a drag on PTC will now aid growth, so the negative overhang on the stock should reduce.

  2. This is a longish shot; but if PFS’s asset quality has now improved and it can grow profits, there may be more buyers interested in purchasing the Company from the Parent. As and when that happens, the cash inflow will provide additional rerating triggers for the stock.

Reposting this old note here for ease of reference :

October 01, 2020 :
CMP : 46.90
Market Cap : 1388 cr
FY20 Standalone PAT / EPS - 320 cr / 10.81
PE : 4.3x
Dividend Yield (FY20) : 11.7%

Investment Hypothesis :

  1. Divestment of Non- Core Businesses :
    PTC has invested approximately Rs 1400 cr in its two subsidiaries, PFS and PEL.
    PFS stake is up for sale, 10 bids were received before 31st July 2020. IDFC Securities managing the sale process.
    PTC’s investment in PFS is Rs 750 cr. Let’s assume it recovers only Rs 600 cr.
    Similarly, investment in PEL is Rs 650 cr, assume recovery of only Rs 500 cr. Note that PEL’s divestment was derailed by IL&FS failure. Due to uncertainty created by AP government over renewable energy contracts, regulatory clarity is required and could delay PEL’s divestment.
    Given the current environment, lets assume both these divestments happen over 2 years from now. Therefore over next 2 years, about Rs 1100 cr should be received from sale of subsidiaries.
  2. Sale of investment in Athena Energy :
    The plant is commissioned and running smoothly for over 12 months now. All contracts are operational and PTC does not require to retain its stake any more. Thus let’s assume the stake sale is conducted over next 2 years and PTC receives book value of Rs 191 cr. Sikkim State Government has already put up its 30% stake for sale and Greenko has expressed interest.
    The sale of 2 subsidiaries and stake in Athena Power could generate Rs 1291 cr conservatively. Management expects to get a premium on book value in all 3 cases.
  3. If PAT remains flat at FY 20 levels for 2 years, cumulatively Rs 640 cr, of incremental cash would be generated, bringing total cash visibility to approximately 1931 cr, which is 40% more than current market cap.

It would help to address some shareholder concerns at this juncture :

Debt :

A bulk of debt on the consolidated balance sheet pertains to its subsidiaries which are leveraged and should reduce as these are sold.

Receivables : A lot of concern in the stock pertains to receivables. However 2 points to note here : 1) Historical track record attests to the fact that there are cases of delay in payments but never defaults. Entire sums are recovered with full interest. 2) These receivables represent credit exposure to state government bodies and therefore can be considered as quasi government debt. There are delays but no capital losses; which makes it a situation of nil loss, given default. More perspective on this later.

Volume Growth : There is a perception that current growth is aided by the long term contracts executed during the 2009 - 2012 period. No doubt some of those contracts provide volumes but a bulk of those contracts are not yet functional since the underlying assets are not yet commissioned. Additionally, PTC continues to enter into similar arrangements continuously. For eg : In FY20, it aggregated 1900 mw of power demand from multiple discoms and sourced power from various generators for medium term ( 3 - 5 years). In FY21, it aims to contract 2500 mw of power on similar lines. Historically volumes have grown 12 to 14% p.a. and i expect that to continue. Volume growth could pick up if merchant prices rise and make defunct capacities functional. Merchant prices need to rise to about Rs 4.5 to 5 / unit for this to come into play.

Secondly, PTC’s market share in a growing market has remained fairly stable and has reported gains in FY20. This suggests that PTC is growing in line with market or improving share.

Capital Allocation : The management has categorically stated in the AR as well as in the past few concalls that it intends to focus on its core business and exit its non core investments. The proceeds are likely to be used for investments in trading software and bulk of the proceeds will be returned to shareholders. Furthermore, they have committed to remaining in asset light businesses, thereby limiting the need for capital.
The stated dividend policy envisions paying out at least 50% of PAT. The stock currently trades at a dividend yield of 11.8%

  1. A Fresh Perspective on Receivables : PTC’s core business does not require reinvestment. Therefore the cash it generates would remain on its Balance Sheet if credit were not extended to clients. In such a scenario, this cash would generate 4 to 6% p.a. through investment in liquid mutual funds.

A : Treasury Management : PTC opts to provide credit to its customers and charge 12 to15% p.a. on this credit. Historically, they have even charged 18% as surcharge. Extending credit to Government bodies and reducing risk of capital loss is smart treasury management in my opinion.
B : Credit : Many companies extend credit to their customers as a sweetener to boost sales. PTC follows the same practice to help grow sales. In this case too, bad debt write off is the key monitorable. As long as dues are recovered, this does not posit a problem.

  1. Core Business :
    Let’s assume, post the new electricity reforms, the power sector in India becomes healthy and customers pay discoms on time and in turn discoms pay generators on time. This would result in a situation where PTC would not have to extend credit to discoms and therefore stop earning “Surcharge” and would not have an opportunity to provide liquidity to IPPs and earn “Rebate”. Thus PTC’s balance sheet would have negligible receivables and payables. Capital employed would naturally shrink to just its own gross (net) block. In FY20, PTC’s gross block stood at Rs 34.37 cr.
    Since it intends to invest in trading software, lets assume the cost will be capitalised. Hypothetically, let the cost be Rs 50 cr. This would bring its gross block to about Rs 85 cr.

Now if we were to strip the amount of surcharge and rebate from FY20 earnings, we would be left with a PAT of approximately Rs 150 cr. Thus the core business would be generating ROCE of 176% on enhanced gross block of Rs 85 cr. Such profitability would be at par with some of the leading FMCG players in India.

While i do not envision such a scenario in India, the illustration serves the purpose of highlighting strength of the core business.

Outlook on Power Sector :

Power sector has witnessed the classic capital cycle over the past 2 decades. There was a rush to put up capacities until 2010. The subsequent 10 years have seen capital flight from the sector due to a host of challenges faced by private players. As a result no new capacity additions have been announced by the private sector. Meanwhile demand has consistently grown and has started accelerating due to the Government’s push for electrification of all villages. Deen Dayal Upadhayay Gram Jyoti Yojana has effectively added 35% of the population as new consumers for electricity.

Tellingly, electricity demand grew 5% yoy in september 2020, although economic activity is still below pre-covid levels.

Lead times to set up capacity are very long, generally 7 to 8 years. Therefore new capacity additions announced today are unlikely to ease supply constraints in the foreseeable future.
Arguments in favour of renewable energy are moot due to the low PLF of these assets. Broadly, lets assume PLF for solar and wind at 20%. Then 5000 mw of installations would generate 1000 mw of power. This output fluctuates due to climatic conditions and reduces consistently due to declining efficiency of the equipment every year.

Notably, the last few auctions for solar and wind have attracted less participation and efficient players like Torrent Power are refraining from bidding as they do not see a risk - reward equilibrium. Many FII’s like Softbank and GIC have decided to withdraw from investing in renewable energy due to contract repudiations by AP government.

Both solar and wind capacity bidding and installation targets were missed by a wide margin in FY20.

In sum, supply shortages are looming and not enough capacity can come up within reasonable time.

The Cement industry requires liasoning with the government largely for procurement of mines but has freedom in setting up capacities and marketing output. Additionally, capex requirements are lower and therefore the demand supply situation is fluid and can rebalance frequently.

Unlike Cement, Power is regulated end to end, from mining of coal to the price paid by the consumer, everything requires regulatory permissions and interactions. This makes setting up power capacity very challenging and therefore i do not see supply rebalancing quickly. We are likely to see several years of demand growth outstripping supply.

Naturally, this should lead to rising utilisations and rising prices for power. Investment in efficiency improvement such as shifting from CFL to LED etc have been carried out by the Government. There is now little scope to garner efficiency gains. Perhaps therefore EESL the nodal body for driving electricity efficiency is now repurposing itself to create battery charging infrastructure for EVs.

Today most discoms are unwilling to enter into long term PPA’s. This has been the primary driver of distress in the sector for the past 7 - 8 years. However, if power prices start rising, discoms will be forced to float long term PPA’s and get assured supply at reasonable prices. Else they will face higher prices and uncertain supply from players who have faced the brunt of low prices and absence of PPA’s. In a situation where a lot of capacities need to be tied up coupled with growing aggregate demand from discom, PTC should be able to play an important role in matching and optimising demand and supply.