PTC India: On the path of growth: Prabhudas Lilladher,

PTC India: On the path of growth
 Back-ended but strong growth: PTC has a strong pipeline in terms of
trading volumes for the next 2-3 years. The company would be a major
beneficiary for the upcoming private capacities for which it has tied-up
with long and short term PPAs. The company will have close to 620MWs
of capacities coming up in FY11 which would be followed up by nearly
2000MWs in FY12E and another 2000MWs by FY13E. Apart from this, PTC
would also start tolling of 350MWs (Simhapuri & Meenakshi) which would
add to the trading volumes and PAT would be close to Rs1bn as well. PTC
has signed PPAs of nearly 15000MWs, of which 60% are financially closed.
The company is well placed in terms of achieving nearly 40bn units as
traded volumes by FY14 as against 18bn in FY10. The company, whose
realisations are in the range of 5.8-7 paisa per unit for domestic and 2.7
paisa for power traded from Bhutan, would continue to maintain them at
the same levels, going forward.
 Strategic investments: PTC has made strategic investments in PTC
Financial Services (PFS), PTC Energy (PEL), Athena Energy Ventures and
Ashmore Group which would provide ample value creation and unlock
opportunities in the power sector. PTC till now has invested Rs4.5bn in
PFS, Rs1.5bn in Athena Energy, Rs1bn in PEL and will commit close to
Rs3bn for Ashmore group’s P/E fund. PTC is planning a P/E/IPO for PFS
(Rs6-7bn) and a P/E for Athena Energy. Through PEL, the company
targets to be a coal arranger for future tolling projects: For PFS, it
targets to have an asset size of US$1bn, while it targets to indirectly
participate substantially in power generation through Athena Energy and
power funding through Ashmore group’s US$300m P/E fund.
 Valuations: Over the next few years, PTC would make its presence felt
in power value creation chain in a big way. Apart from being indirectly
involved in power generation space, the core business is set to grow 2.5x
in the next two years with stable trading margins. We value the core
trading business at 15x FY12E (Rs57/share), whereas investments in PFS
(Rs30), PEL (Rs14), Teesta Urja (Rs12), stake in Krishna-Godavari (Rs3)
Athena Energy Ventures (Rs10) on P/BV of 2-3x of committed funding and
cash (Rs23).
Meeting Update