For 4QFY2011, PTC India (PTC) reported net profit growth of 67.2% yoy, aided by strong growth in operating profit. Operating profit for the quarter rose by 263.9% yoy to `34cr on account of higher trading volumes (up 62% yoy) and an increase in trading margins as per new CERC regulations to 7paise from the 4paise, a year back. Going ahead, we expect PTC to witness healthy volume growth due to addition of ~1,300MW and ~4,000MW to its long-term trading (LTT) portfolio in FY2012 and FY2013, respectively.
Operating profit up 263.9% yoy: PTC’s 4QFY2011 net sales grew by 67.2% yoy to `2,079cr. The improvement in the top line was on account of a 62% improvement in volumes to 5,191mn units (MU). The yoy increase in volumes was aided by additional units arising from Lanco Amarkantak (operational since 4QFY2010). Operating profit stood at `34cr (up 263.9% yoy) due to robust growth in trading volumes and higher trading margins. Net profit rose by 141.0% yoy to `34cr during the quarter.
Outlook and valuation: We expect PTC’s top line and bottom-line to witness 25.6% and 20.5 % CAGR respectively CAGR over FY2011–13E. Although, the management clarified in the conference call that the substantial increase in the debtor days at the end of FY2011 is due to the restructuring of discoms of Tamil Nadu and Karnataka, it remains a cause of concern. At the CMP of `89, PTC is trading at 14.4x FY2012E and 13.0x FY2013E earnings. We have a neutral view on the stock.
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