In its latest report, HDFC Securities has come out with a buy rating on the shares of PTC India. HDFC Securities has a target price of Rs 143 on the shares. PTC India shares closed at Rs 120.35 on NSE. HDFC Securities’ target price implies an upside of more than 19% from the current market prices. “We have valued the company on SOTP basis and feel investors could buy the stock at the CMP and add on declines to Rs 103-106 band for sequential targets of Rs 131 (considering 11x FY19E Core EPS and 30% holding company discount) and Rs 143 (considering 13x FY19E Core EPS) over the next 3-4 quarters,” noted HDFC Securities.
Track live stock price: PTC India
Notably, the shares have returned more than 65% in the year so far. HDFC Securities says that the company is slated to gain due to Teesta Urja project. “The much delayed 1200 MW (200 MW x 6 units) Teesta Urja hydro project became operational in Q4FY17. CERC has approved an interim tariff of 4.8/unit for two years. PTC has entered into long term PPA agreement from this project for 800 MW which is likely to begin from FY19. In the meantime the company is selling the power on short term basis. This will add to the long term volumes of the company going forward,” said the firm in its report.
Apart from capital appreciation, HDFC Securities says that the firm had also paid out rich dividends to its investors. “As PTC has limited requirement for capex it has been paying out surpluses to the shareholders as dividend. Dividend paid by the company has increased from 15% in FY12 to 30% in FY17 and likely to increase further. If PTC is able to divest 26% in PTC Energy the requirement to fund the subsidiaries would reduce leaving more cash to be distributed to shareholders. At the current price the FY17 dividend yield works out to 2.6%,” noted HDFC Securities.