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PTC India Ltd (PTCIND)
Fundamental – BUY
• PTC India Ltd has evolved from a pure play power trading company into a diversified and integrated
entity with businesses ranging from power trading, coal trading, power project development and
project financing. The company has signed long term PPA’s, with equity stakes in multiple projects.
• PTC India’s (PTC) current 18 bn kWh power trading volume in FY10 is expected to catapult 150% by
FY13E and triple by FY15E to 57 bn kWh. This growth is expected solely from long‐term PPA‐based
trades, where margins are higher. This ensures PAT of INR 2.67 bn in FY13E (233% growth over
FY10).
• The management has indicated that it plans to list PTC Financial Services in FY11 as some of the
original investors were offered exit option by January 2011. Recent media reports highlight a
valuation of INR 19 bn at 3.2x FY10 book value, translating into INR 49/share for PTC. We have
valued the same at 0.8x FY10 book value INR 12 / share, for our sum of the parts (SOTP). We believe
the listing of PFS would provide a valuation re‐rating trigger for PTC.
• CERC has recently revised margin structures for Power Purchase Agreements (PPAs) wherein cap on
short term PPA tariffs has been increased from 3 paisa to 5 paisa and cap on long term PPAs has
been abolished. This, we believe provides a long term structural fillip for PTC India’s profitability and
business.
• We believe PTC India should be accumulated at CMP of `135 for a medium term target of `180.
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