Buy PTC India; target of Rs 58: CD Equisearch

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26 Aug, 2025 12:21

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CD Equisearch's Research Report on PTC India Financial ServicesPFS has started the financial year on a good note with growth in revenues and profitability in the first quarter. We expect this momentum to continue in the coming quarters as investments in the infrastructure sector pick up pace. The twelfth five year plan (2012-2017) estimates an additional capacity requirement of 88.5 GW, 53% of which is expected to come from the private sector- up from 19% in the eleventh five year plan.Greater focus needs to be accorded to renewable sources of fuel such as hydro, solar and wind. Currently only 2700 MW out of a total solar potential of 300000 MW, and 21000 MW out of the total wind potential of 50000 MW are installed. Harnessing this potential is critical to have a balanced portfolio of generation capacities in the longer term.Currently, renewable accounts for about 39% of PFS’s total loan book, with about 80% of the renewable loan book being wind power and the remaining solar power. 32% is from thermal projects, about 9% from hydro projects and rest is contributed by other sectors. The government policies are getting clearer and management expects disbursement growth to pick up strongly in FY16. Cancellation of 204 coal blocks by the Supreme Court was resolved after reallocation of some of the cancelled mines through the e-auction route. The government of India is taking major steps to double the domestic production of coal to 10 billion tones by 2020As a result we expect income from investments and loan financing to grow at an average growth of around 35% for each of next two years.IFC (International Finance Corporation), a World Bank group member, has invested $35 million in the 10-year non-convertible debentures of PFS. PFS will use the funds to boost long-term financing for renewable energy, particularly in wind and solar projects in India. The investment will help generate an estimated 129 GWh (gigawatt hour) of clean energy over five years.PFS followed a provisioning of around 0.3% against standard assets till FY14 but they have decided to increase the same to 0.5% from FY15 onwards. This is mainly due to increasing losses of State Electricity Boards and discoms and fiscal malaise at state power utilities - plant load factor for India's thermal power sector slipped to 59% by June 2015 from 65% last fiscal year."The stock currently trades at 1.5x FY16e BV (10.2x FY16e EPS) and 1.3x FY17e BV (7.4x FY17e EPS). We recommend ‘Buy’ based on 1.6x FY17e BV (9.3x FY17e EPS) with a target of Rs 58 within a time horizon of 6-12 months (refer to our previous report dated Mar 30, 2015)", says CD Equisearch report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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