Analysis of PTC India Share Price

What made me do the analysis of PTC India share price?

Recently I observing the overall stocks market and its individual sectors in general.

In last few days, the stock market has been showing signs of a possible correction.

During such times, I often visit BSE India’s website and watch individual sector’s indices.

Here I found that the S&P BSE POWER index was hovering closest to its 52W Lows.

In todays times, when Sensex and Nifty are trading at all high high levels, S&P BSE POWER is close to its 52W low.

This can only happen when the share price of individual stocks of power sector/Index is falling.

Moreover, the market is moving towards a possible correction. It means, the stocks of POWER sector may fall further.

This is a great moment to grab some fundamentally strong stocks of this Power Sector.

With this thought process in mind, I started glancing at the financial reports of almost all stocks which are included in S&P BSE POWER index.

There I found PTC India.

About PTC India

PTC India is a company whose promoter are Government of India companies. Following are promotors of PTC India having substantial shareholding in the company:

• NHPCL – 4.05%
• NTPC – 4.05%
• Power Finance Corp – 4.05%
• Power Grid Corp – 4.05%

In totality, promotors hold close to 16.22% in PTC India.

PTC India provides power trading solutions in India since year 1999.

These days PTC India works more like a complete solution provider for the power sector.

How they do it?

PTC India works mainly like an intermediatary. On one hand they have Independent Power Producers (IPPs) of India. On the other hand they have Power distribution companies.

PTC India support both type of companies, which ultimately results in efficient power generation and distribution to the needful areas.

PTC India also has a subsidiary called PTC India Financial Services. This group provides support to the companies operating in power sector in terms making them available the needful financing.

Mr. Deepak Amitabh is the Chairman and MD of PTC India. He worked as an IRS officer for GOI, before been sent on deputation in PTC India as its CFO.

Mr. Ajit Kumar is the Director (Commercial & Operations) of PTC India. Before joining PTC India, he worked in NTPC for 35 years.

Dr. Rajib K Mishra is the Director (Marketing & Business Development) of PTC India. He is also an Ex. GOI employee having serves Power Grid Corp and NTPC is various capacities.

Other members included in the BOARD of PTC India are Nominees from other promoter group companies:

1. Nominess Director from Ministry of Power
2. Nominess Director from Powergrid Corp
3. Nominess Director from Power Finance Corp. of India
4. Nominess Director from NHPC
5. Nominess Director from NTPC
6. Nominess Director from LIC

I must say that, the composition of PTC India Board members is very impressive. And the same is also reflected in their financial reports.

Short term price movement of PTC India

In last four months (since Nov’17), PTC India’s share price has dropped from Rs.126 levels to Rs.96.5 levels. This is a drop of 23.4% in 4 months.

In last 30 days itself, PTC India’s share price has dropped from Rs.120 to Rs.96.5 levels. This is a drop of 19.5% in just 1 month.

This sudden price drop prompted me to look into the business fundamentals of PTC India.

My intention is to include this stock in my watch list. If current price of this stocks is anywhere close to its intrinsic value, it becomes very interesting.

This company being so heavily guarded by GOI, if I can catch this stock at its intrinsisc value, it is sure to give good returns.

Moreover there are two more points working in its favor:

(1) Power sector is doing bad now.

But it will improve in times to come.

(2) Indian stock market is going for a possible major correction.

This will further make PTC India share price to fall further.

If presently PTC India share price is not below its intrinsic value, stock market correction will surely bring it there.

These are my findings about PTC India share price analysis:

#1. Growth Rates:

I personally like stocks which show’s consistent growth in its past.

The financial parameters that are more important to quantify growth rate are as follows:

• Free Cash Flow Growth
• Reserves Growth
• Income Growth
• Profit Growth
• Dividend Growth &
• EPS growth (my favorite)

I use my stock analysis worksheet to quantify all these values. This is the result for PTC India:

Download PDF Copy – Share_Price_Analysis_PTC.India.pdf

#2. Financial Ratios

Financial ratios gives a quick idea about the stocks price valuation and companies profitability levels.

The ratios that I prefer to see, before than other ratios, are as below:

• Price Valuation
  • Price to Earning Ratio (P/E)
  • Price to Book Value Ratio (P/B)
  • Price to Sales Ratio (P/S)
  • Price to Free Cash Flow (P/FCF)
• Profitability
  • Return on Equity (ROE)
  • Return on Capital Employed (RoCE)
  • Cash Returned on Invested Capital (CROIC)

I use my stock analysis worksheet to quantify all these values. This is the result for PTC India:

Download PDF Copy – Share_Price_Analysis_PTC.India.pdf

#3. Quick Glance at important indicators of stock

Before investing, I prefer looking at few indicators that gives me a rough idea about the current position of the stocks price.

What are these few indicators?

• Current price compared to its 52W high and Low price.
• How much the price changed in last 30 days and 12 months.
• What is the market cap.
• Compared to the Industry P/E, what is the P/E of stock.
• What is the price growth in last 3Y, 5Y and 10Y.
• What is the average dividend yield in last 3Y, 5Y and 10Y.

I use my stock analysis worksheet to get quick answers to these questions. This is the result for PTC India:

Download PDF Copy – Share_Price_Analysis_PTC.India.pdf

#4. Price Charts of Last 10 Years

Though for fundamental analysis looking at price chart is not essential, but I prefer glancing at them before investing.

It gives a general idea of the price trend of the stocks.

I use my stock analysis worksheet to generate the 10 Year price chart. This is the result for PTC India:

Download PDF Copy – Share_Price_Analysis_PTC.India.pdf

#5. Quarterly Trends

It is essential to see the quarterly trends of company before committing.

The quarterly trends that I refer are as below:

• Total Income – TTM data verses last FY data (if rising or falling).
• Net Profit – TTM data verses last FY data (if rising or falling).
• Earning Per Share (EPS) – TTM data verses last FY data (if rising or falling).

I use my stock analysis worksheet to get pictorial chart for the above important informations. This is the result for PTC India:

Download PDF Copy – Share_Price_Analysis_PTC.India.pdf

#6. What is the Intrinsic Value?

Intrinsic value calculation is not easy. But investing in a stock without comparing its intrinsic value with its current price is a big mistake.

Based on the knowledge that has been gathered, this worksheet attempts to estimate the intrinsic value of its stock.

There are several ways to estimate intrinsic value of a stock. But I rely more on the following methods. I have incorporated all of my favourite method in my worksheet to estimate intrinsic value of stocks:

• DCF method
• NCAPS method
• Absolute PE method
• Reproduction cost method
• etc

I use my stock analysis worksheet to estimate intrinsic value of stock. This is the result for PTC India:

Download PDF Copy – Share_Price_Analysis_PTC.India.pdf

#7. What is the final conclusion?

After considering almost all aspect of stocks as discussed above, how to arrive at a final conclusion?

The ultimate question is, the stock is good or bad? How to arrive at this conclusion?

My stock analysis worksheet does this very nicely for me. Based on the following parameters, it generates an overall grade for its stock.

If the generated grade is above 85%, the stock is considered good.

Lets see what grades are generated for PTC India:

• The Overall grade for PTC India is 69%.
  • The market price of PTC India seems to be priced just right. It scores 99%
  • In terms of future growth prospects, PTC India gets 100%.
  • PTC India earns low (46%) for its managements efficiency.
  • In terms of profitability, PTC India scores the lowest, 9%.
  • Financial Health of the company is only average at 61%.
  • There is no bankruptcy threat to PTC India. It earns 100%

It must be noted that, this worksheet gives more importance to the price valuation of stock. A stock which is priced right will score higher.

This worksheet scores stocks rather defensively.

There are not many stocks in the market that can earn grade above 80% from this worksheet.

This is one reason why, I can say that PTC India looks to be a good stock. But due to its profitability, its overall score dips.