PTC India - Q4FY13 Result Update - Sushil Finance

PTC India Ltd. (PTC) has reported decent set of numbers for the quarter ended March'13 which is in-line with our expectations. Revenues & PAT grew by ~52% & 23% YoY to Rs.21,987 mn & Rs.370 mn respectively. We attended the analyst meet of the company and following are the key highlights of the results which are summarized below:

Key Highlights of Q4FY13 Results

Robust trading volumes coupled with better performance of tolling biz has resulted in strong revenue growth of ~52% YoY to Rs.21,987 mn in Q4FY13. Volumes in Q4FY13 (excl. tolling volumes) improved by ~47% YoY from 4.4 BU's to 6.4 BU's; majorly driven by higher short-term & long-term volumes. In FY13, volumes grew by ~14% to 27.6 BU's v/s 24.3 BU's in FY12 (incl. tolling volumes ~18% YoY). Management expects volumes to grow at a CAGR of ~15% over the next 2 years.

Increasing volumes along with healthy tolling margins led to strong operating profit growth of ~58% YoY to Rs.511 mn while margins improved slightly by 10 bps to 2.3%. However with increasing competition, trading margins remained under pressure wherein the average margin in Q4FY13 & FY13 stood at Rs.0.036 & Rs.0.039/unit (FY12 - Rs.0.044/unit).

Higher tax outgo coupled with lower other income led to comparatively lower growth in net profits which grew by ~23% to Rs.370 mn whereas margins dipped marginally by 40 bps to 1.7%.

Other Developments

Tolling Biz - In Q4FY13, tolling volumes were back to normal at 304 MU's v/s 225 MU's in Q3FY13 wherein the production had got impacted due to some boiler issues. In FY13, volumes from tolling stood at 952 MU's, thus contributing ~3% to the total volumes. PTC earned healthy tolling margins during FY13 which stood at ~Rs.0.8/unit, thus contributing ~Rs.762 mn to PBT (~42%). Management expects upcoming Meenakshi power plant to get operational in Q1FY14E.

O/s dues from TNEB & UPPCL - PTC received ~Rs.5.5 bn during the current quarter of which ~Rs.4.5 bn was from UPPCL (which were majorly on back-to-back basis) & Rs.1 bn from TNEB. Thus, the total net outstanding from both these states stands at ~Rs.7 bn (TNEB - Rs.2.8 bn; UPPCL - Rs.4.5 bn). Management expects full recovery of o/s amount from TNEB in next 2 quarters while recovery from UPPCL would take some time.

OUTLOOK & VALUATION

PTC has reported decent set of numbers for the quarter ended March'13 which is in-line with our expectations. Gradual economic recovery coupled with strong pipeline of long-term PPA's provides visibility of healthy volume growth going ahead. Moreover, better performance by tolling biz (Meenakshi getting operational in Q1FY14) in FY14 is likely to further enhance the profitability of the Company. Increasing government initiatives to revive power segment coupled with gradual repayment of dues from TNEB & UPPCL has further mitigated the concerns over recovery of outstanding dues. Hence, considering the growth potential, we recommend 'BUY' on stock with a price target of Rs.74 based on the SOTP methodology.

Source : Equity Bulls

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