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India Equity Research Reports, IPO and Stock News
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Investment Rationale
Market leader with Diversified portfolio
Change in business mix
Cash rich company with huge strategic
investments
Huge projects pipeline
FII’s have increased their stake in the company in
the last quarter
Recently came with the IPO for the PTC financial
services
Company Background
PTC India Limited (PTC), the leading provider of power
trading solutions in India. It is a Government of India
initiated Public-Private Partnership, whose primary focus is
to develop a commercially vibrant power market in the
country.
The trading activities undertaken by PTC include long term
trading of power generated from large power projects as
well as short term trading arising as a result of supply and
demand mismatches, which inevitably arise in various
regions of the country.
PTC India holds a leadership position in the market and
currently enjoys a market share of ~46%. Its is promoted by
a public private partnership namely NTPC, Powergrid, PFC
and NHPC Ltd who have credible track record in the
industry.
Investment Rationale
Market leader with Diversified portfolio
PTC is the market leader in power trading segment with
almost a market share of ~46%. PTC India has diversified
portfolio into power generation, tolling, project financing,
and coal trading for captive power capacities, which is
helping to garner volumes. Currently PTC also has power
tolling agreements with two power projects namely
Simhapuri and Meenakshi Energy for a combined capacity
of 360 MW.
Change in business mix
The business mix for the company mainly consist of short
term trades, long term contracts and cross border trades.
Recently the change in business mix, from short term trades
(which constituted ~30% of the revenues till last year) to
long term contracts, has helped company to improve its top
line and margins.
Cash rich company with huge strategic
investments
PTC has cash and cash equivalent of Rs11b, and has
investments of Rs7b into subsidiaries/project SPVs. The
company has huge strategic investments in Athena Energy
Ventur, Barak Power, Krishna Godavari, PTC Energy & PTC
India Financial and Teesta Urja.
Huge projects pipeline
Total PPAs signed by the company stand at 13,000MW for
the Q3FY11. Growth in trading volumes is expected due to
addition of ~500MW and ~4,000MW of projects to the
company’s long-term trading portfolio. These power
projects include 300MW Lanco Amarkantak Phase-II,
1,200MW Teesta, 550MW Ind Bharat Utkal and 700MW
Karcham Wangtoo. Power trading from the tolling projects
with Madhucon Projects Ltd. And Meenakshi Project Ltd.
would also begin from H2FY12.
FII’s have increased their stake in the company in the
last quarter
Foreign Holdings have increased in December quarter to
19.74% from previous quarter of 16.37% which shows
confidence in the company.
Recently came with the IPO for the PTC financial
services
PTC India’s subsidiary PTC Financial Services with 77%
holding in the subsidiary is raising around 463crs through
IPO. PTC Financial Service ltd has a very good past track
record in financing the projects especially for power
projects with NBFC and IFC status entailing for benefits.
Valuation Ratio
Going forward power deficit and favorable government
policies will help in the growth of the company. The change
in business mix in favor of long term contracts will help to
take advantage of CERC regulations of no cap on long term
volumes. At CMP of Rs. 81, PTC is trading at 17.08x FY11E
and 13.27x FY12E earnings. We expect a price target of Rs.
130.
Concerns
Any delay in execution of long term projects.
Increased competitive intensity.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Investment Rationale
Market leader with Diversified portfolio
Change in business mix
Cash rich company with huge strategic
investments
Huge projects pipeline
FII’s have increased their stake in the company in
the last quarter
Recently came with the IPO for the PTC financial
services
Company Background
PTC India Limited (PTC), the leading provider of power
trading solutions in India. It is a Government of India
initiated Public-Private Partnership, whose primary focus is
to develop a commercially vibrant power market in the
country.
The trading activities undertaken by PTC include long term
trading of power generated from large power projects as
well as short term trading arising as a result of supply and
demand mismatches, which inevitably arise in various
regions of the country.
PTC India holds a leadership position in the market and
currently enjoys a market share of ~46%. Its is promoted by
a public private partnership namely NTPC, Powergrid, PFC
and NHPC Ltd who have credible track record in the
industry.
Investment Rationale
Market leader with Diversified portfolio
PTC is the market leader in power trading segment with
almost a market share of ~46%. PTC India has diversified
portfolio into power generation, tolling, project financing,
and coal trading for captive power capacities, which is
helping to garner volumes. Currently PTC also has power
tolling agreements with two power projects namely
Simhapuri and Meenakshi Energy for a combined capacity
of 360 MW.
Change in business mix
The business mix for the company mainly consist of short
term trades, long term contracts and cross border trades.
Recently the change in business mix, from short term trades
(which constituted ~30% of the revenues till last year) to
long term contracts, has helped company to improve its top
line and margins.
Cash rich company with huge strategic
investments
PTC has cash and cash equivalent of Rs11b, and has
investments of Rs7b into subsidiaries/project SPVs. The
company has huge strategic investments in Athena Energy
Ventur, Barak Power, Krishna Godavari, PTC Energy & PTC
India Financial and Teesta Urja.
Huge projects pipeline
Total PPAs signed by the company stand at 13,000MW for
the Q3FY11. Growth in trading volumes is expected due to
addition of ~500MW and ~4,000MW of projects to the
company’s long-term trading portfolio. These power
projects include 300MW Lanco Amarkantak Phase-II,
1,200MW Teesta, 550MW Ind Bharat Utkal and 700MW
Karcham Wangtoo. Power trading from the tolling projects
with Madhucon Projects Ltd. And Meenakshi Project Ltd.
would also begin from H2FY12.
FII’s have increased their stake in the company in the
last quarter
Foreign Holdings have increased in December quarter to
19.74% from previous quarter of 16.37% which shows
confidence in the company.
Recently came with the IPO for the PTC financial
services
PTC India’s subsidiary PTC Financial Services with 77%
holding in the subsidiary is raising around 463crs through
IPO. PTC Financial Service ltd has a very good past track
record in financing the projects especially for power
projects with NBFC and IFC status entailing for benefits.
Valuation Ratio
Going forward power deficit and favorable government
policies will help in the growth of the company. The change
in business mix in favor of long term contracts will help to
take advantage of CERC regulations of no cap on long term
volumes. At CMP of Rs. 81, PTC is trading at 17.08x FY11E
and 13.27x FY12E earnings. We expect a price target of Rs.
130.
Concerns
Any delay in execution of long term projects.
Increased competitive intensity.
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