Moneycontrol
Dec 01, 2016 09:35 AM IST | Source: CNBC-TV18

PTC India can give 25-30% return till Budget: Aashish Tater

Aashish Tater of fortunewizard.com is of the view that PTC India is a very safe stock and can give 25-30 percent return till Budget.

Aashish Tater of fortunewizard.com told CNBC-TV18, "We are trying to map in where the demonetisation impact will be least and it can either benefit or it will have an indirect benefit. PTC India fits in it because the market cap is around Rs 2,200 crore odd; Rs 1,300 crore odd is just invested into PTC India Financial Services, it's the 60 percent subsidiary of the company where it reaps in around Rs 40-45 crore of dividend for that 60 percent stake. If you knock that out, you are getting this company at Rs 800 crore with other Rs 400-500 crore of odd receivables net out."

"This time it was announced that both UP State Electricity Board and Tamil Nadu Electricity Board along with Andhra Pradesh will have huge recoveries because of demonetisation impact. So who will benefit from this? Definitely PTC because all those receivables will now be recognised rather than getting recognised year after year as a debtor," he said.

"Second, the most important thing is you are getting the trading business after knocking out the other investments at less than 3.8x PE and the company has shown tremendous result for this quarter. Therefore, we feel, going forward there will be a higher dividend payout and we expect a dividend of Rs 2.5 to Rs 2.8 a share and that will have an adjustment to the stock price because the dividend yields will go better for the company."

"So we have a nominal target of Rs 88 to Rs 92 though the book value is Rs 115. The other thing is once the rate of interest gets cut down; people will look for dividend arbitrage where there is a good dividend yield as well as good value potential to create in the longer term. So this fits the bill where we feel at Rs 70 this is a very safe stock for 25-30 percent return till Budget, so a safer stock from short-term perspective."

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