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Jun 11, 2011, 02.13 PM IST | Source: Moneycontrol.com

Buy PTC India; target of Rs 25.7: Aditya Birla Money

Aditya Birla Money is bullish on PTC India Financial Services (PFS) and has recommended buy rating on the stock with a target of Rs 25.7 in its June 1, 2011 research report.

Aditya Birla Money is bullish on PTC India Financial Services (PFS) and has recommended buy rating on the stock with a target of Rs 25.7 in its June 1, 2011 research report.

PTC India Financial Services (PFS) is a systemically important non deposit taking NBFC, promoted by PTC India Ltd (PTC). The company is primarily engaged in equity investment as well as debt financing to projects across the energy value chain in India. PFS raised `3.57 bn through an IPO by offering 127.5 mn equity shares @28.0 in March 2011. However, the stock got badly hammered post its listing owing to various concerns in the power sector. However, we believe PFSs equity investments and loan disbursements to power projects is comfortably placed in terms of fuel sourcing, regulatory approvals, etc. We believe at current valuation the stock looks attractive.

We have valued PFS in two parts i.e. equity investment book and loan financing book separately. For valuing the equity investments, we have assumed base case post tax equity IRR of 18% and cost of equity of 14%, to arrive at the multiple of 1.54 x to its current equity investment book of ~4.59 bn. Applying this derived multiple to FY14E equity investment book of ~7.33 bn and discounting it at FY12, gives us a value of `15.4 / share. The loan financing book is valued at 1.1x its FY12E book value of ` 5.25 bn, thus giving us a fair value of `5.77 bn or ` 10.3 / share. This gives us the fair value for both the business at 25.7/share in the base case scenario, implying an upside potential of 45.4% from current levels. We initiate coverage on PFS with a BUY rating and a price target of ` 25.7 /share, implying an upside potential of 45.4% from current levels, says Aditya Birla Money research report.

Shares held by Financial Institutions/Banks

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