12 August 2014
1QFY15 Result Update | Sector:
Utilities
PTC India
BSE SENSEX
25,519
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
7,626
PTCIN IN
296.0
23.2/0.4
104/39
0/27/62
CMP: INR84
TP: INR115
Buy
Financials & Valuation (INR b)
Y/E Mar
Sales
EBITDA
NP*
Adj.EPS(INR)
EPS Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2015E 2016E 2017E
153.3 177.6 197.7
1.9
2.8
9.5
-22.0
88.1
7.0
7.7
8.8
1.0
3.1
3.9
13.3
39.6
93.2
10.4
12.6
6.3
0.9
3.4
4.5
15.0
13.3
99.0
10.9
13.6
5.6
0.8
Strong volume growth boosts PAT:
During 1QFY15, PTC India reported revenues
stood at INR36.9b, v/s estimate INR32.3b led by higher trading volumes and
marginally higher average realization. While revenue was higher, EBIDTA was in-
line with estimate, adjusted for rebate/surcharge of INR109m. Tolling business
contribution in EBIDTA too was in-line with estimate. Adjusted EBIDTA stood at
INR462m (reported at INR571m), v/s estimate of INR471m. Reported PAT stood at
INR438m, and adjusting for rebate/surcharge at INR364m, lower than estimate.
Key disappointment was lower trading margin.
Trading margin lower, tolling margin higher:
Adjusted trading margin for PTC
stood at Ps4.31/unit, v/s estimate of Ps5.3/unit. Despite improvement in average
realization and similar mix as in 1QFY14, margins were down YoY (Ps6.33/unit in
1QFY14). On Tolling business front, while PBT was in-line with our estimate, it was
owing to lower volumes at 414MUs (v/s 500MUs) and higher margin at
INR0.35/unit, v/s estimate of INR0.25/unit.
Key takeaways from concall:
1) Receivables stood at INR30b, v/s creditors at
INR17b – gap of INR13b, v/s INR10b as at FY14, 2) 4.8GW of capacity will be added
to portfolio over FY15-16E, 3) PPAs for 11GW and PSA for 7GW, 4) Large part of
upcoming capacity tied-up back to back. Also, tariff framework is unlikely to pose
any major threat.
Valuations and view:
We expect PTC to report consolidated net profit of INR2.8b
in FY15E (down 22% YoY) and INR3.9b in FY16E (up 40% YoY). PTC trades at 6.3x
PER and 0.9x P/B on FY16E basis.
Nalin Bhatt
(NalinBhatt@MotilalOswal.com); +91 22 3982 5429
Investors are advised to refer through disclosures made at the end of the Research Report.

PTC India
1QFY15 reported performance boosted by rebate/surcharge income
PTC India reported revenues of INR36.9b, higher than our estimate of INR32.3b.
This was led by higher trading volumes at 9.8BUs vs our volume estimate of
8.5BUs. Also, the average realization for the quarter stood better at
INR3.76/unit in 1QFY15, vs INR3.43/unit YoY. Tolling volumes stood at 414MUs,
vs our estimate of 500MUs.
We note that volume growth continued to remain robust at 22% YoY for trading
business. Also, contribution of tolling volume at 414MUs (vs 308MUs YoY),
further aided volume growth.
Volume growth robust
Units Traded (MUs)
37%
62%
21%
31%
17% 12%
-21% -16%
29%
-2%
9%
YoY Growth (%)
54%
28%
15%
40%
14%
22%
Source: Company
Reported revenue also includes INR109m of gain owing to surcharge (INR49m)
and rebate income (~INR104m). EBIDTA thus, stood at INR571m on reported
basis and INR462m, after taking off surcharge and rebate income.
This was in-line with our estimate of INR471m. Thus, the higher volume and
realisation growth was partly offset by lower margins in trading business.
PBT for the company stood at INR658m, which post adjustment for
rebate/surcharge stood at INR549m. This was lower than our estimate of
INR633m. This was led by lower other income at INR98m, vs our estimate of
INR175m and INR120m QoQ. It is to be noted that while cash levels have
improved YoY, the other income has come down due to shift in allocation of
funds to FDs, vs liquid MF products earlier.
Tax/PBT ratio stood at 34% v/s our estimate of 30% leading to PAT at INR438m.
Adjusted for rebate/surcharge income, PAT stood at INR364m, lower than
estimate of INR443m.
Tolling arrangement margin tad higher, Trading margin muted
For the 1QFY15, the tolling volumes stood at 414MUs, lower than our estimate
of 500MUs. Tolling margins for the company however stood slightly better at
INR0.35/unit, vs estimate of INR0.25/unit. PBT for the business was however in-
line at INR145m, vs estimate of INR125m.
As per our calculation, adjusted trading margin (excluding tolling project) stood
at Paisa4.3/unit post adjustments for INR109m of rebate and net surcharge. This
was lower than our estimate of margins at Paisa 5.3/unit.
12 August 2014
2

PTC India
Margins remain range bound (Ps/unit)
6.3
5.0
4.6
5.3
4.3
4.9
4.2
3.8
4.7
4.0
3.1
4.1 4.2
3.1
4.5
Surcharge income boosts trading contribution (INR m)
810
606
3.7 3.7
239
144 109 176
230
25
43
27
129 91
109
Source: Company
Source: Company
Net receivable higher
As at FY14, the gross trade receivable for PTC on standalone basis stood at
INR20.9b, vs INR21.4b as at March 2013. Last year, the company had
outstanding receivable dues from TN and UP, which has been cleared in FY14.
Despite this, the sustained level of receivable could be owing to higher volumes
necessitating higher working capital requirement.
We thus look at the net open position. So, trade payable for PTC stood at
INR10.9, vs INR11b YoY. So, net receivable stood at INR10b, which stood at 9%
of reported FY14 revenue. This compares with 12% in FY13.
For 1QFY15, Receivables stood at INR30b, vs creditors at INR17b – gap of
INR13b, indicating further widening vs FY14. Utilization of cash and cash
equivalent of INR5b remain key to watch out for.
Key takeaways from concall
4.8GW of capacity will be added to portfolio over FY15-16E,
PPAs signed for 11GW, while PSA are in place for ~7GW. Large part of upcoming
capacity tied-up back to back and thus does not pose any major challenge.
Also, tariff framework is manageable and even assuming open capacity in the
interim.
Commencement of supply of power, 200 MW each, to Haryana and Uttar
Pradesh from Jaypee Karcham Wangtoo on Long term basis
Received an LOI from Tangsibji Hydro Energy Limited (ThyE), Bhutan for
purchase of power from their 118 MW Nikachhu Power Plant in Bhutan.
Valuations and view
We expect PTC to report consolidated net profit of INR2.8b in FY15E (down 22%
YoY) and INR3.9b in FY16E (up 40% YoY).
PTC trades at 6.3x PER and 0.9x P/B on FY16E basis.
12 August 2014
3

PTC India
PTC India: an investment profile
Company background
Key investment risks
PTC India Ltd. is the pioneer in power trading in
India, and over the years has become a Power
Solutions company. It was set up in April 1999 with a
mandate to catalyze the development of large power
projects by acting as a single buyer for PPAs with
independent power producers on one hand and by
entering multi-partite PPAs with users and SEBs
under long-term arrangements on the other. The GoI
has identified PTC as its nodal agency for trading
power with neighboring countries.
Poor financial health of SEB’s would increase
debtors
Changes in the regulatory regime, receivable risk
Increasing competition in the short-term market
Power off-take risk in executing long-term contracts
Recent development
The company received an LOI from Tangsibji Hydro
Energy Limited (ThyE), Bhutan for purchase of
power from their 118 MW Nikachhu Power Plant in
Bhutan.
Key investment arguments
Change in business mix towards long-term contracts
extends volume and margin visibility.
Addressable market of PTC to rise due to open access
to intra-state transmission, easing of interstate grid
constraints, commissioning of new merchant power
plants, etc
4.8GW of projects are expected to be added to
trading portfolio over FY15-16E, on current base of
3.1GW, providing sizable volume growth.
Valuation and view
We expect PTC to report consolidated net profit of
INR2.8b in FY15E (down 22% YoY) and INR3.9b in
FY16E (up 40% YoY).
PTC trades at 6.3x PER and 0.9x P/B on FY16E basis.
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
6.1
9.4
Consensus
Forecast
6.7
8.1
Variation
(%)
-8.6
16.4
Target price and recommendation
Current
Price (INR)
84
Target
Price (INR)
115
Upside
(%)
36.9
Reco
Buy
FY15
FY16
Shareholding pattern (%)
Jun-14
Promoter
DII
FII
Others
16.2
35.5
26.1
22.2
Mar-14
16.2
43.6
20.5
19.7
Jun-13
16.2
47.2
15.1
21.5
Stock performance (1-year)
Notes: FII includes depository receipts
12 August 2014
4

PTC India
Financials and valuations
12 August 2014
5

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6