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| Repost of mohit analysis on IEX and PTC (2) 06-Jul-08 13:05 | Tracked by (0) |
| | Posted by:  vjkumk on ( 06-Jul-08 13:05 ) | | | Price : BSE: Rs 72.60 ( 6.30 % ), NSE: Rs. 72.55 ( 5.84 % ) | I am reposting mohit analysis on ptc which was posted on sep,2007 to have a glimpse of how IEX is going to benefit ptc.
Hello Everyone,
I am consultant working in the power sector. As a part of my project work, I was going through the model of PTC. I found that their business model has got the potential to make a killer of a profit. Please take a look at the following analysis which proves so. If you find any mistake, do let me know. Quarterly trading volumes of PTC are follows:-
Jan to Mar 06 2079.500
Apr to Jun 06 2152.400
Jul to Sep 06 2217.400
Oct to Dec 06 1235.916
Jan to Mar 07 972.989
Apr to Jun 07 2481.007
There is 4 paise per unit profit margin cap setup by the power regulator (CERC) in india and hence PTC makes a 4 paise profit on every unit of electricity traded. 4 paise*2481 MUs = 9.92 Cr, Now profits in Q1 of FY08 were 11.88 Cr. which show that PTC's profits are directly proportional to its trading volumes and trading margin. On a yearly basis they are trading around 8000 MUs (taken on a higher side for the analysis)
PTC in 2003 and 2004 started starting MoUs with power plants to buy electricity. Following is the Commissioning schedule of the power plants.
Name of project Capacity (in MWs) Peaking Capacity (duration)/ Base load Expected commissioning
Meenakshi Power Ltd. For 37 Peaking Cap. nil 2007
Middle Kolab and Lower Kolab Small Hydro Electric Project
Orissa Power Consortium Ltd. For 20 Peaking Cap. - 3 hrs 2007
Samal HEP
Everest Power Pvt. Ltd. for 100 Peaking Cap. - 4 hrs 2007
Malana-II HEP in Himachal Pradesh
Aban Loyd Chiles Off-shore Ltd. For 260 Base Load Plant 2007
Gas Based Project in Haryana
KVK Nilachal Pvt. Ltd. for 250 Base Load Plant 2007
Thermal Power Project in Vishakapatnam, A.P.
India Power Corporation Ltd for 100 Base Load Plant 2007
Coal based Plant in Orissa
Vemagiri Power Generation Ltd. for 740 Base Load Plant 2008
Gas Based Project in East Godavari, AP [Ph-II]
Chennai Power Generation Ltd. For 1000 Base Load Plant 2008
Thermal Power Project in T.N.
Torrent Power Generation Ltd. For 270 Base Load Plant 2008
LNG/ Gas based project in Gujarat
Essar Power Ltd. for 1500 Base Load Plant 2008
Gas based Power Project in Hazira, Gujarat.
Lanco Green Power Private Ltd. For 70 Peaking Cap. 4 hrs 2008
Budhil HEP in Himachal Pradesh
Jindal Power Ltd. For 300 Base Load Plant 2008
Coal based Thermal Power Project in Chattisgarh
Gujarat Paguthan Energy Corporation for 700 Base Load Plant 2008
Combined Cycle Gas Project in Gujarat
Lanco Amarkantak Power Pvt. Ltd. 300 Base Load Plant 2008
We can see an expected capacity of 767 Mw comes online in FY08, 4880 MW in FY09 and 5818 MW in FY10.
Every MW on an average generates 7.2 MUs yearly. Which means trading volumes are bound to increase by 5522 MUS in FY08, 35136 MUs in FY09 and
41889 MUs in FY10. Their trading volumes are bound to increase by (as compared to FY07 figures)
FY08 69%
FY09 508%
FY10 1032%
Hence their trading volumes are bound to get a shot in the arm.
The second factor on which their profits depend in the profit margin (presently regualted by the CERC). The profit margin is presently capped at 4 paise per unit.
However their is a Power Exchange (PX) that is proposed to be MCX (in consortium with PTC, Tata Power etc.). PX has been approved by the regulator (CERC). PX will have Uniform Market Clearing Price (MCP)*. If you look at the type of generator PTC is having, they are mostly thermal & Hydel stations. Thermal and hydel station are cheap compared to gas based plants. Now due to uniform market clearing price, power that PTC trades in the PX will fetch them more than 4 paise margin. The margin can be aroung 100-50 paise. Which means due to increase in profit margin, their profits can increase by 1150%-2400%
The total beenfits of these two factors are when the two will be multiplied. But again, benefits of both PX and higher volumes will come by the end of 2008 only (when the plants come online). Considering this analysis can anyone project the target of PTC. I wish to invest heavily and hence want my any mistake in my analysis pointed out. Being a trading expert at a reputed consulting firm, I am very VERY sure that my analysis is correct.
MCP - basically means that every one who sells in the PX will get the price of the costliest unit that got despatched. Ex- I wish to sell 1 MUs at 1 Rs. and there is another guy who wishes to sell 5 MUs at 3 Rs. Now upon demand supply matching the second guy is also despatched in PX, then it means that even I would be given 3 Rs for my 1 MU and my profit margin would be 200 paise. Now, since PTC is having cheaper generation (thermal and hydro), they would earn a larger profit margin than 4 paise they earn now.argin than 4 paise they earn now. |
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