PTC India Financial Services Ltd (PFS) is a non-banking financial institution promoted by PTC India Limited (PTC). PFS was set up as a special purpose investment vehicle to provide financing solutions to the various segments and stages of energy companies. This will include includes investing in equity and extending debt to power projects in generation, transmission, distribution, fuel sources, fuel related infrastructure like gas pipelines, ports, etc. For this reason the RBI has granted Infrastructure Finance Company (IFC) status to PFS.
Current shareholding shows Goldman Sachs Strategic Investments, a Mauritius based company is a subsidiary of Goldman Sachs, also holds 11.20 %. A part of the Macquarie Group, MIHL, is a provider of specialist investment, advisory and financial services also holds 11.20%.
The current issue is being held with the aim to meet the future capital requirements arising out of growth in business.
Many analysts and experts have put up different reasons in support of investment in this company. PTC is the market leader for power trading solutions in India. PTC is an established brand name in the Indian power sector, hence, PFS will benefit from PTC"s industry knowledge. The other major argument is that India is an electricity deficient country, therefore, many power projects will commence in the coming years.
Looking beyond the rosy part, there are lots of thorns attached which requires a thorough look. PFS is smaller than competitors which are other large banks and NBFC"s who have strong balance sheet and long existing clientèle. Since, it is new the cost of raising funds will be higher compared to its peers. This will test the financing ability of the firm, which is yet to be proven. The risk associated for being only in power, single sector, is a major concern. Energy projects especially the power generation projects carry risks of executions and delay in materialisation, this can have significant adverse impact on the financials of PFS. Above all the promoters also have interest in similar line of business, which could result in conflicts of interest, this could affect future
Way to wealth, a brokerage company in its report has recommended its clients to 'avoid'. MLR Securities has advised to subscribe the issue. Parasram, a security brokerage company, in its report has not taken a specific stance has leaned towards 'buy' side.
In our view, comparing the possible positive reason with that of risks and the obstacles the company will need to cross, caution will spell a better option for retail investors. Unless you are a risk taker, wait till the stock is listed and is available for a better price.