PTC India (Standalone) - Rating: SELL; Target Price: Rs48 - Centrum

During the quarter, PTC India (PTC) received gross overdues of Rs7.8bn (net Rs4.5bn) from UPPCL; whereas, pending dispute resolution with TNSEB, PTC expects to receive balance overdue of Rs2.5bn in Q4FY14.

During the quarter, we expect PTC to clock a volume of 7.9 BU (+35% YoY and -27% QoQ). However, the sales volume mix is skewed towards sale on IEX/PXIL and its share is estimated to be about 28% in Q3FY14E vs. 18% in Q2FY14 and 23% in Q3FY13. A higher share of trade on IEX/PXIL implies (1) higher proportion of working capital being blocked; (2) lower trading margins at Rs0.03/kWh and (3) an inability to identify buyer/seller under bilateral trade and hence negative.

We built-in robust trading margin of Rs0.3/kWh for its erstwhile tolling projects and Rs0.08/kWh from export of 250 MW to Bangladesh from Dec-13. Net rebate/surcharge which represents the efficiency of working capital will be a key variable. We have factored in earnings of Rs100mn.

Source : Equity Bulls

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