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PTC India: A strong start to the year - Views on News from Equitymaster
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PTC India: A strong start to the year
Aug 18, 2014

PTC India declared its results for the quarter ended June 2014 recently. The company reported a revenue and profit growth of 33% YoY and 47% YoY respectively during 1QFY15. Here is our analysis of the results.

Performance summary
  • Revenues rise by 33% YoY led by a 23% YoY rise in volumes during the quarter ended June 2014.
  • Operating margins surge by 69% YoY as margins expand by 0.4% YoY to 1.6%; higher growth in volumes coupled with lower other expenses leads to a sharp surge in operating profits.
  • Profits for the quarter ended June 2014 rise by 48% YoY led by a strong operating performance. However, net profit margins remain in low single digits (1.2% in 1QFY15).

Standalone numbers
Rs (m) 1QFY14 1QFY15 Change
Trading volume (MU) 8,418 10,309 22.5%
Net revenue 27,705 36,895 33.2%
Expenditure 27,364 36,320 32.7%
Operating profit 340 576 69.2%
EBIDTA margin (%) 1.2% 1.6%  
Other Income 81 93 14.6%
Depreciation 11 10 -7.9%
Interest 4 1 -80.3%
Profit before tax 407 658 61.6%
Exceptional items 0  -  
Prior period expenses 3  -  
Tax 114 221 93.5%
Effective tax rate 28.0% 33.5%  
Profit after tax/ (loss) 297 438 47.5%
Net profit margin (%) 1.1% 1.2%  
No. of shares (m) 296 296  
Diluted earnings per share (Rs)*   8.8  
Price to earnings ratio (x)*   9.6  
(* trailing 12 months earnings)

What has driven performance in 1QFY15?
  • The company expects volumes to touch 40 bn units in the current year (35.1 bn in FY14). Growth is expected to remain strong on the back of power purchase agreements on long term basis – 11 GW, of which 7.1 GW has been already tied up.

  • The company expects long term volumes to contribute to nearly half the volumes 2 to 3 years down the line. Currently they contribute to about one-third of volumes. This would be a positive for the company considering that this is a relatively higher margin business segment.

  • The management expects volumes of the direct to business (retail segment) volumes to touch 10 bn units over the next three to four years.
What to expect?
At the current price of Rs 84, the stock is trading at a multiple of 1 times its FY14 book value per share.

As far as the company’s working capital situation goes, the same seems to be under control. As of June 2014, the company’s debtor and creditor position stood at Rs 29.2 bn and Rs 17 bn respectively.

While we had closed our position on the stock on the back of the recommendation period coming to an end, we had advised investors to hold on to the stock from a long term perspective.

We would like to remind you that within the overall exposure to equities, you must ensure that you broadly follow our suggested asset allocation and that no single stock comprises more than 5% of your portfolio.

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