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PTC: Volumes surge, but profits... - Views on News from Equitymaster
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PTC: Volumes surge, but profits...
Oct 26, 2009

Performance summary
  • Sales grow by 21% YoY during 2QFY10, 49% YoY in 1HFY10. Strong growth in traded volumes helps growth in sales during both the periods.
  • Operating margins almost double in 2QFY10 led by decline in power purchase costs (as percentage of sales).
  • Other income declines by 38% YoY during the quarter while taxes rise by 114% YoY. This negatively impacts the bottomline that declines by 6% YoY. Effective tax rate during 2QFY10 stood at 33%, as against 18% in 2QFY09.

Financial performance: A snapshot
(Rs m) 2QFY09 2QFY10 Change 1HFY09 1HFY10 Change
Units traded (m) 5,159 6,388 23.8% 7,846 10,592 35.0%
Sales 20,313 24,582 21.0% 32,344 48,299 49.3%
Expenditure 20,172 24,285 20.4% 32,144 47,854 48.9%
Operating profit (EBDITA) 141 297 111.0% 199 444 122.9%
Operating profit margin (%) 0.7% 1.2%   0.6% 0.9%  
Other income 281 175 -37.5% 457 455 -0.3%
Depreciation 16 14 -13.1% 31 27 -11.8%
Interest 8 0 -98.4% 17 1 -95.7%
Profit before tax 398 458 15.3% 608 871 43.2%
Extraordinary income/(expense) 0 (0)   0 (0)  
Tax 70 149 114.2% 91 228 149.3%
Profit after tax/(loss) 328 309 -5.7% 517 643 24.4%
Net profit margin (%) 1.6% 1.3%   1.6% 1.3%  
No. of shares       227.4 294.1  
Diluted earnings per share (Rs)*         3.5  
P/E ratio (x)*         27.6  
* On a trailing 12-months basis

What has driven performance in 2QFY10?
  • PTC grew its sales by 21% YoY during 2QFY10. This was aided by a strong 24% YoY growth in traded volumes, which stood at 6,388 m units during the quarter. The realisations on these volumes averaged Rs 3.85 per unit, down around 2% YoY. For 1HFY10, PTC’s trading volumes increased by 35% YoY. Importantly, the company traded 10,592 m units during the first half, which was almost 77% of what it traded during the whole of last financial year FY09.

  • PTC’s operating margins almost doubled to 1.2% during 2QFY10. This was a direct result of a fall in power purchase costs (as percentage of sales).

  • Despite a good showing on the topline and operating margins fronts, PTC’s net profits declined by 6% YoY during 2QFY10. This was on the back of a sharp 38% YoY decline in other income as also a 114% rise in tax outgo.

What to expect?
At the current price of Rs 97, the stock is trading at a multiple of 27.6 times its trailing 12-months earnings, and 15.3 times our estimated FY12 earnings. PTC’s 1HFY10 performance is fairly in line of meeting our full year targets. We shall update this analysis post the analyst meet scheduled for today evening.

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Feb 23, 2018 (Close)


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