Maintain ‘buy’ on PTC India with target price of R112 per share. Management is now working towards enhancing long-term trading volumes and improving mix of medium/long-term volumes, which should enhance earnings visibility. We have re-calibrated volume growth in FY15 to 10% and rolled over to FY17e based valuations.
PTC’s standalone Q3FY15 PAT, excluding the provision for diminution in value of investment and rebate/surcharge income, was in line at R2,850 crore. While trading volume at 7.7BUs was lower than estimate and contribution from erstwhile tolling at R1,220 crore was lower, higher-than-expected trading margin at R0.047 per unit offset earnings impact.
We expect concerns surrounding signing of PSAs and transmission bottlenecks linked volume ramp up to get addressed in a short while on improving demand outlook.
Standalone reported PAT of R660 crore was impacted due to R3,320 crore diminution in value of investment in the 1,200 MW Teesta Urja project. Adjusted for this and the surcharge/rebate income of R1700 crore, PAT at R2850 crore matched estimate. Trading volumes dropped 5.6% y-o-y to 7.7 BUs versus estimated 8.0 BUs owing to sharp 15% y-o-y drop in short-term volumes.