PTC India Q4 results muted, but Elara ups target price to Rs 210; here's why

PTC India has experienced a notable shift in its stock target price, revised to Rs 210 by Elara Securities, following the completion of its divestment of PTC Energy. The transaction, amounting to Rs 1,175 crore, has unlocked substantial value for the company. This development is expected to strengthen PTC India's financial position and enhance investor confidence, as reflected in the updated target price.

In its financial performance for Q4FY25, PTC India reported mixed results. The standalone revenue from operations saw a decline of 14% year-on-year, reaching Rs 2,900 crore. This downturn is primarily attributed to a significant 16% drop in surcharge income, which fell to Rs 82.2 crore. Additionally, there was an increase in other expenses, with provisions against litigation rising to Rs 32.4 crore from Rs 8.57 crore in the previous year.

Despite the revenue challenges, PTC India reported an impressive rise in its reported Profit After Tax (PAT) for Q4FY25, reaching Rs 521.4 crore. This increase was largely due to a one-time exceptional gain of Rs 521.6 crore from the sale of PTC Energy to ONGC Green. However, the Profit Before Tax (PBT) experienced a decline of 35% year-on-year, amounting to Rs 86.4 crore for the quarter.

The company's core operating margin showed resilience, increasing by 14% year-on-year to Rs 60.2 crore. Furthermore, PTC India reported a reduction in receivables from Bangladesh, now standing at Rs 577 crore. These improvements contribute to a more stable financial outlook for the company.

Electricity volumes for PTC India saw an upward trend, with total volumes sold increasing by 5% year-on-year to 19,004 million units. The short-term volumes rose by 6.6%, while long and medium-term volumes experienced a growth of 3.3%. This growth in electricity volumes is indicative of sustained demand in the market.

Elara Securities has adjusted its stance on PTC India, revising its recommendation to 'Accumulate' from 'Buy', citing the appreciation in stock price. The brokerage ascribes a value of Rs 95 per share to standalone operations, supported by the improved financial metrics and strategic divestments.

The trading margins for PTC India varied across different terms, with short-term margins at Rs 0.0103 per unit, medium-term at Rs 0.0163 per unit, and long-term at Rs 0.0799 per unit. These margins reflect PTC India's strategic pricing across its trading activities, which are crucial for maintaining profitability in a competitive market.

Overall, the divestment of PTC Energy is seen as a positive strategic move, unlocking value and providing a clearer path for future investments. The updated stock target of Rs 210 signals potential growth and reflects market optimism towards PTC India's evolving business strategy.