Rs 7.8/Sh Dividend Ahead: Maintain REDUCE On PSU Energy Stock, Target At Rs 207: Elara Capital

PTC India, a PSU stock in the energy sector, is recommended to REDUCE by Elara Capital. The brokerage has trimmed its target price on the power stock to Rs 201. PTC India last week announced Rs 7.80 per share for FY24, which will be made soon.

On BSE, PTC share price ended at Rs 212.85 apiece, up by 3.5% on June 12. The market cap is at Rs 6,300.54 crore. The smallcap's stock 52-week high and low is at Rs 254.65 apiece and Rs 104.55 apiece.

YTD, the stock is up by 10% on BSE.

In its research note, Elara Capital said, PTC India's (PTCIN IN) Q4 reported revenue (standalone) declined 1.4% YoY to INR 33bn. Surcharge income in Q4 rose 24% YoY to INR 930mn. Net rebate rose 3.4% YoY to INR 300mn in Q4FY24. The core margin increased by 1% to 2.94 paise per unit versus 2.91 paise per unit last year. Traded volumes increased 10% YoY to 18,024mn units (MU). Reported PAT declined 47% YoY to INR 829mn.

Further, the brokerage highlighted that PTCIN reported an exceptional item of INR 205mn in Q4 on account of a provision created against the amount deposited with a supplier. An exceptional item of INR 500mn was reported last year on account of an impairment provision. Factoring in exceptional items, adjusted profit rose 12.3% YoY to INR 1,224mn.

In the case of volumes, the brokerage mentioned that PTC's volume of short-term trades increased 17% YoY to 11,789MU and volumes of medium- and long-term trades declined 1.6% to 6,235MU. Short-term volume comprised 65% of total volume in Q4FY24 and long and medium-term volume 30% and 5%, respectively.

Elara's note said, "PTCIN seeks to keep the proportion of short-term trades and long- and medium-term trades at 50-50. Long- and medium-term segments are high-margin segments for PTCIN."

On the valuation, the brokerage said, We revise FY25E-26E earnings and maintain Reduce with TP unchanged at INR 207." Adding it said, "We value the standalone operations at INR 119 per share on 9.0x FY26E P/E. We ascribe a value of INR 49 per share to PTCIN's investment in PFS, INR 25 per share to its investment in PTC Energy, INR 7 per share to its investment in HPX and INR 7 per share for cash and other investments."

PTC has announced a final dividend of Rs 7.80 per share for FY24. Dr. Rajib K Mishra, Chairman & Managing Director, PTC India said, "The Board of Directors has recommended a dividend of INR 7.80 per equity share for FY24, reiterating the confidence in PTC's business model and prospects of the business in the future."

PTC India Ltd., a Government of India initiative, is the pioneer in starting a power market in India. The Company has maintained its leadership position in power trading since inception. PTC has also been mandated by the Government of India to trade electricity with Bhutan, Nepal and Bangladesh. The trading activities undertaken by PTC include long-term trading of power generated from large power projects including renewables as well as short-term trading arising as a result of supply and demand mismatches, which inevitably occur in various regions of the country.