Buy PTC India – ICICI

ICICI has reiterated an OUTPERFORMER rating on the PTC – Power Trading Corporation.
PTC India’s results for the year ending March 31, 2007 (FY07) were below expectations. Net sales at Rs 3,766.66 crore (estimate: Rs 3,933.54 crore) were impacted due to access factors and real-time transmission congestion. Going forward, we expect PTC’s traded volumes to increase on account of higher utilization from the Tala unit (4 billion units) and significant volumes from long-term agreements starting Sept 2008.

At the current market price of Rs 57, the stock is trading at 10.05x its FY09 earnings, 5.50x on FY09 EV/EBITDA and 2.33x FY09 P/BV. The company’s increased focus on high growth, high-margin long-term trading should help it sustain growth and also improve margins.

ICICI Research has set a price target of Rs 95 per share of PTC India using a DCF valuation and reiterates an OUTPERFORMER rating on the stock. Click here to download PTC report.