PTC India Ltd— BUY—117—INR
Sector — Power (Distribution)
Regd.Off.— 15 Bhikaji Cama Place, New Delhi - 110066
Listed — NSE, BSE.
Company overview—
PTC India Ltd. (PTC), the leading provider of power trading solutions in India, is Government of India initiated Public-Private Partnership, whose primary focus is to develop a commercially vibrant power market in the country. Since its inception in 1999, PTC has sought to provide holistic services that address the sustainability of a power market model, including intermediation for long-term supply of power from identified domestic and cross-border power projects, providing equity support to selected power projects, advisory services and foray into providing fuel linkages to power plants of various utilities / generators participating in the power market. India is the third largest producer of electricity in Asia with an installed capacity that has increased from 1362 MW in 1947 to about 126545 MW. In spite of the overall shortage, the inherent diversity in demand of various States and Regions in the country results in periods of seasonal surplus in one State or Region coinciding with periods of deficit in another. Company is the pioneer in developing and implementing the concept of power trading in India and has successfully demonstrated its efficacy in optimally utilizing the existing infrastructure within the country to the benefit of all. Company is not just the leading power trader in the country, but has also diversified into the unique role of being a total solutions provider in the power supply business.
Products & Services—
PTC has a two-fold mandate; to develop a full fledged, efficient and competitive market mechanism for trading in power and to facilitate the development of generation projects including through private investment, both resulting in reliable, economic and quality power in the long term. PTC is involved into Development of power market for optimal utilization of energy, Promote power trading to optimally utilize the existing resources, Catalyze development of Power Projects particularly environment friendly hydro projects and Promote exchange of power with neighboring countries.
Company is working as an entity for credit risk mitigation for Mega and other large Power Projects by acting as an intermediary to enter into Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) on the one side and Multipartite PPAs with users / State Electricity Boards (SEBs) under long term arrangement on the other, thus insulating the IPPs from protracted negotiations with multiple SEBs and from receivables risks. PTC has also been mandated for power trading to optimally utilize the existing resources in the country as also promoting exchange of power with neighboring countries. It’s service offerings include Long term power sale solutions spanning 10-35 years with power being sold from a generating plant to one or more state utilities / distribution companies, Short term power sale solutions spanning anywhere between a few hours to one year, where surplus power is sourced from generating plants / state utilities for sale to various state utilities across the country, Power sourcing / supply solutions for Captive Power Producers / Bulk consumers for purchase / sale of power to meet their needs both in the long as well as the short term, Advisory services to IPPs / states / regulators etc. regarding power market mechanisms, tariff options etc. It has already signed various agreements / MoUs for purchase of power from various power projects and is in the process of signing agreements / MoUs for sale of power from these projects to various state utilities.
Recent developments—
Company has raised Rs 4,999.92 million by issuing over 66.66 million equity shares at a price of Rs 75 per Equity Share (including a premium of Rs 65 per Equity Share) through qualified institutional placement (QIP) in May 2009.
PTC Financial Services, a subsidiary of Power Trading Corporation (PTC), is considering hitting the capital market next fiscal to rise about Rs 15 billion by divesting 26% of the promoters’ stake. The present equity capital of PTC Financial Services is Rs 6 billion, 77% of which is held by PTC India and 11.5% each by Goldman Sachs and Australian company Macquarie. PTC Financial Services is a diversified entity, was formed in 2008-09 for providing equity support to power projects in the country. PTC Financial Services is also looking at acquiring coal blocks abroad and has short listed mines in Australia and Indonesia, where the fuel is available in abundance.
Valuation—
At current market price, stock is trading at 14.56 P/E multiple of its FY2010 Estimated EPS. We recommend investors to buy “PTC India ltd” with medium to long-term investment horizon.
Sector — Power (Distribution)
Regd.Off.— 15 Bhikaji Cama Place, New Delhi - 110066
Listed — NSE, BSE.
Company overview—
PTC India Ltd. (PTC), the leading provider of power trading solutions in India, is Government of India initiated Public-Private Partnership, whose primary focus is to develop a commercially vibrant power market in the country. Since its inception in 1999, PTC has sought to provide holistic services that address the sustainability of a power market model, including intermediation for long-term supply of power from identified domestic and cross-border power projects, providing equity support to selected power projects, advisory services and foray into providing fuel linkages to power plants of various utilities / generators participating in the power market. India is the third largest producer of electricity in Asia with an installed capacity that has increased from 1362 MW in 1947 to about 126545 MW. In spite of the overall shortage, the inherent diversity in demand of various States and Regions in the country results in periods of seasonal surplus in one State or Region coinciding with periods of deficit in another. Company is the pioneer in developing and implementing the concept of power trading in India and has successfully demonstrated its efficacy in optimally utilizing the existing infrastructure within the country to the benefit of all. Company is not just the leading power trader in the country, but has also diversified into the unique role of being a total solutions provider in the power supply business.
Products & Services—
PTC has a two-fold mandate; to develop a full fledged, efficient and competitive market mechanism for trading in power and to facilitate the development of generation projects including through private investment, both resulting in reliable, economic and quality power in the long term. PTC is involved into Development of power market for optimal utilization of energy, Promote power trading to optimally utilize the existing resources, Catalyze development of Power Projects particularly environment friendly hydro projects and Promote exchange of power with neighboring countries.
Company is working as an entity for credit risk mitigation for Mega and other large Power Projects by acting as an intermediary to enter into Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) on the one side and Multipartite PPAs with users / State Electricity Boards (SEBs) under long term arrangement on the other, thus insulating the IPPs from protracted negotiations with multiple SEBs and from receivables risks. PTC has also been mandated for power trading to optimally utilize the existing resources in the country as also promoting exchange of power with neighboring countries. It’s service offerings include Long term power sale solutions spanning 10-35 years with power being sold from a generating plant to one or more state utilities / distribution companies, Short term power sale solutions spanning anywhere between a few hours to one year, where surplus power is sourced from generating plants / state utilities for sale to various state utilities across the country, Power sourcing / supply solutions for Captive Power Producers / Bulk consumers for purchase / sale of power to meet their needs both in the long as well as the short term, Advisory services to IPPs / states / regulators etc. regarding power market mechanisms, tariff options etc. It has already signed various agreements / MoUs for purchase of power from various power projects and is in the process of signing agreements / MoUs for sale of power from these projects to various state utilities.
Recent developments—
Company has raised Rs 4,999.92 million by issuing over 66.66 million equity shares at a price of Rs 75 per Equity Share (including a premium of Rs 65 per Equity Share) through qualified institutional placement (QIP) in May 2009.
PTC Financial Services, a subsidiary of Power Trading Corporation (PTC), is considering hitting the capital market next fiscal to rise about Rs 15 billion by divesting 26% of the promoters’ stake. The present equity capital of PTC Financial Services is Rs 6 billion, 77% of which is held by PTC India and 11.5% each by Goldman Sachs and Australian company Macquarie. PTC Financial Services is a diversified entity, was formed in 2008-09 for providing equity support to power projects in the country. PTC Financial Services is also looking at acquiring coal blocks abroad and has short listed mines in Australia and Indonesia, where the fuel is available in abundance.
Valuation—
At current market price, stock is trading at 14.56 P/E multiple of its FY2010 Estimated EPS. We recommend investors to buy “PTC India ltd” with medium to long-term investment horizon.
Source: Internet (Valuenotes by Abhishek Jain)
