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Higher surcharge income boosts earnings

PTC India's (PTCIN IN) revenue remained flat at INR 32bn, but higher surcharge income drove an 86% YoY rise in EBITDA and a 76% YoY increase in standalone PAT to INR 1.1bn. Total electricity volumes grew 29% YoY to 19,245MU, with trading margins at INR 0.0075, INR 0.0215, and INR 0.077 per unit for short-, medium-, and long-term segments. Receivables improved, with Bangladesh-related dues reducing to INR 6,930mn. PTC Energy’s divestment is expected by 28 February 2025, and no further investments are planned in Sikkim Urja. We upgrade PTCIN to Buy with TP pared to INR 191.

Topline flat, PAT up on higher surcharge income: Standalone revenue from operations increased 1% YoY to INR 32bn. Revenue from the power segment rose 1.2% YoY to INR 33bn but revenue from the financing business declined 23% YoY to INR 1.5bn. PTCIN earned a surcharge income of INR 1,052mn in Q3FY25 versus a surcharge income of INR 355.3mn in Q3FY24. Standalone EBITDA rose 86% YoY to INR 1.5bn. Standalone PAT increased 76% YoY to INR 1. 1bn. Consolidated PAT rose 58% YoY to INR 1,764mn. PAT from discontinued operations of PTC Energy was at -INR 19.4mn versus -INR 198.7mn. Consolidated PAT after considering discounted operations rose 87% YoY to INR 1,811mn.

‘Electricity sold’ rose 29% YoY in Q3FY25: PTCIN’s total electricity volumes increased 29% YoY to 19,245MU. Short term, medium term and long term constituted 63%, 4% and 33% of the volume mix. Short-term volume sold increased 39% YoY to 12,117MU in Q3FY25. Long- and medium-term volume sold rose 15% YoY to 7,128MU in Q3FY25. Trading margin in the short term was at INR 0.0075 per unit in Q3FY25. Medium-term trading margin was at INR 0.0215 per unit in Q3FY25 and long-term trading margin stood at INR 0.077 per unit.

Improving receivables position: Revenue from HPX stood at INR 63.3mn in Q3FY25. PAT stood at INR 14mn in Q3FY25. Core operating margin rose 23% YoY to INR 608.9mn in Q3FY25. Gross consulting revenue declined 18% YoY to INR 122.5mn. Net surcharge increased 377% YoY to INR 793.6mn. Net rebate rose 5% YoY to INR 296.2mn. Divestment in PTC Energy is anticipated to be completed by 28 February 2025. Receivables from Bangladesh have reduced from INR 8,590mn to INR 6,930mn. PTCIN does not intend to invest further in restoring Sikkim Urja

Upgrade to Buy with TP pared to INR 191: We value the standalone operations at INR 115 per share on 7x FY27E P/E. We ascribe a value of INR 35 per share to PTCIN’s investment in PFS, INR 25 per share to its investment in PTC Energy, INR 9 per share to its investment in HPX and INR 7 per share for cash and other investments.

We revise PTCIN to Buy from Reduce with TP pared to INR 191 from INR 207 earlier. Our ratings upgrade is led by a correction in the stock price but we have cut our TP due to delayed divestment of PTC Energy and lower value from PTC Financial Services.

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