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PTC India is the leading power trading company in India with market share of around 33% in CY10. Trading
volume growth is secured by entering into long-term power purchase agreements (PPA) with power developers.
We also expect short-term trading volumes to grow at a CAGR of 25% over FY10-13, driven by the rising power
generation capacity and rising merchant power capacity. Also, better penetration of the power exchanges
would help in boosting the short-term trading market. Overall, the trading volume is estimated to grow 2.3x
over FY10-13.
CERC had earlier fixed a short-term trading margin of 4 paise per unit in 2006. In January 2010, CERC revised the
short-term trading margins at a maximum of 7 paise per unit while keeping the base rate at 4 paise per unit.
This was a positive move for the power trading firms which were reeling under cost pressure.
Driven by an exponential growth in its traded volumes and an uptick in the trading margins, we expect the
non-operational contribution to PBT to fall down from 56% in FY10 to 20% in FY13. We feel that accordingly the
core RoE would also improve to 9.9% in FY13 from 4.5% in FY10.
The company is estimated to show a robust growth in its earnings over the next few years. In the last few
years, the company has also made substantial investment in various areas like power project financing via PFS
or taking direct equity stake, coal trading and power tolling which have great growth potential in the future.
Given its niche positioning, de-risked business model and strong growth outlook with improving core RoE, the
valuations are quite attractive on a sum-of-the-parts basis
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PTC India is the leading power trading company in India with market share of around 33% in CY10. Trading
volume growth is secured by entering into long-term power purchase agreements (PPA) with power developers.
We also expect short-term trading volumes to grow at a CAGR of 25% over FY10-13, driven by the rising power
generation capacity and rising merchant power capacity. Also, better penetration of the power exchanges
would help in boosting the short-term trading market. Overall, the trading volume is estimated to grow 2.3x
over FY10-13.
CERC had earlier fixed a short-term trading margin of 4 paise per unit in 2006. In January 2010, CERC revised the
short-term trading margins at a maximum of 7 paise per unit while keeping the base rate at 4 paise per unit.
This was a positive move for the power trading firms which were reeling under cost pressure.
Driven by an exponential growth in its traded volumes and an uptick in the trading margins, we expect the
non-operational contribution to PBT to fall down from 56% in FY10 to 20% in FY13. We feel that accordingly the
core RoE would also improve to 9.9% in FY13 from 4.5% in FY10.
The company is estimated to show a robust growth in its earnings over the next few years. In the last few
years, the company has also made substantial investment in various areas like power project financing via PFS
or taking direct equity stake, coal trading and power tolling which have great growth potential in the future.
Given its niche positioning, de-risked business model and strong growth outlook with improving core RoE, the
valuations are quite attractive on a sum-of-the-parts basis
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