PTC India : Transcript Q1 FY24

"PTC India Limited Q1 FY-24 Earnings Conference

Call"

August 14, 2023

MANAGEMENT: DR. RAJIB KUMAR MISHRA - CHAIRMAN AND

MANAGING DIRECTOR, PTC INDIA LIMITED.

MR. HARISH SARAN - EXECUTIVE DIRECTOR, PTC

INDIA LIMITED.

MR. PANKAJ GOEL - ED & CFO, PTC INDIA LIMITED.

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PTC India Limited

August 14, 2023

Moderator:Ladies and gentlemen, good day and welcome to the Investor Call of PTC India Limited Q1 FY24 Earnings Conference Call.

The Management Team at PTC India is led by Dr. Rajib Kumar Mishra - Chairman and Managing Director, PTC. Dr. Mishra is accompanied by Mr. Harish Saran - Executive Director, PTC and Mr. Pankaj Goel - CFO, PTC. At this moment, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

I now hand the conference over to Dr. Rajib Kumar Mishra, for opening remarks. Thank you and over to you sir.

Dr. Rajib Kumar Mishra: Thank you. Good afternoon all the investors who are present today and all the analyst who has taken out their time to cover this Analyst Call. And I'm really pleased to come back to you to announce our Q1 FY24 Results. As you must have noted the trading volume has increased by 16% and we have crossed 20 billion units this quarter and the core margin has also increased by 10% to 64.49 crores and the PAT has gone up by almost 20%, 21%. So, with this, what we started last year that the quality trading has to be done and we have to come back to a level which we have seeded last year. We have not only crawled it by 16%, but also given a good profit after tax in this quarter.

Couple of surprises this quarter was one that, the cross border trade which we expected to be more because we see that we start getting the snow melted hydrology in the month of May and June from Bhutan, this year it has come down by almost 800 Million units and there we have shortage as far as the long term import of power. Because of this reason, the per unit margin is slightly decreased from 3.3 Paisa last year to 3.14 Paisa. And we expect that this will increase in this quarter on the ongoing quarter. And this was a temporary phenomenon because of the month of May and June there was lesser hydrology from power imported from Bhutan.

Other sources we had a good control, the shorter on volume was slightly more and the prices in the market was also lower compared to the previous year. We have increased our market share also and last year we see that some of the volumes and so the market share was lesser, this year we have come back to a normal level of our market share. Similar is the case with, I would like to remind you all that the Board has already approved a dividend of 7.8 per share. And this will be declared in the AGM which is supposed to be held on 27th of September this year. And once the AGM approves it, the dividend declaration will be done. We have always believed that the wealth created by the company should be divided and distributed to the shareholders who has the first right to this wealth creation. And our dividend declaration policy is very clear that 50% of our profit subject to internal constraints will be distributed to our shareholders.

The second important thing is the progress what I would like to share with all our investors, is the divestment process in PTC Energy Limited. In our press release, we have clearly mentioned that the process is well on track. And by this month end we will have a firm offers from five or

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PTC India Limited

August 14, 2023

six of the bidders who are expected to participate and they are all credible bidders who are expected to participate and then we will be in a position to give a clear roadmap, how we are going to get this thing resolved. The most heartening thing which has come is from our new investment that is HPX and within a short span of one year this company has become profitable

	and this quarter we have a healthy trend of a profit which we have seen for the first time.
	I'm really happy to share with all our investors and analysts that this time all the holding
	company, the two subsidiary companies and our associates are in green and are given a very
	good result. The other investment that is Teesta Urja Limited, the company has done really good
	and the profitability in that company for the entire last year has crossed more than 1200 crores.
	So, that is also a very heartening sign. Let me once again reassure you that the entire top
	management team is working for the growth of this company and we feel after the results of the
	first quarter of this financial year we are well on track and the ongoing quarter also seems to be
	well on track. So, with this, I hand it over to our Chief Finance Officer, Mr. Pankaj Goel to give
	you the details of what all numbers we have already published, but some analysis what he would
	like to share with you, Mr. Pankaj Goel.
Pankaj Goel:	Thank you, sir. Good afternoon everybody. Now, I'll go through the results for the first quarter
	of FY23-24. First, I'll go through the standalone results of the quarter with the previous year
	quarter ending June. The volume has increased by 16% to 20.6 billion unit from 17.7 billion
	units. Total operational income has already been explained by CMD, has also increased by 8%
	to 147 crore from 136 crore, this is mainly on account of increase in higher margin in our long
	term trade specifically as already informed in the cross border trade. The likewise profit before
	tax has also increased by 20% to 120 crore from 100 crore. So, this is again because of the high
	margin and I will say effective working capital management because you can see from our results
	that Treasury income has gone up and interest expenses from bank borrowing has also gone
	down. So, there is a two way impact. Likewise in line with the PBT, profit after tax has also
	increased by 21%, 90 crore from 74 crore. Total other comprehensive income has increased by
	20% to 89 crore from 74 crore. Earnings per share for the quarter stood at Rs.3.03 compared to
	Rs.2.5.
	Now, I'll go to the consolidated results for the quarter. Volume has increased by 16% to
	20.7billion unit from 17.8 billion units. Profit before tax has increased by 5% to 191 crore from
	182 crore. Profit after tax has increased by 6% to 143 crore from 135 crore. Total other
	comprehensive income has increased by 5% to 142 crore from 136 core. Earnings per share on
	a consolidated basis stood at Rs.4.39 in comparison to Rs.3.97. Thank you.
Moderator:	Should we begin with the question-and-answer session sir?
Dr. Rajib Kumar Mishra: Please go ahead.
Moderator:	Thank you very much. We will now begin the question-and-answer session. We will take our
	first question from the line of Mohit Kumra from Kumra Investment Company. Please go ahead

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Mohit Kumra:Most of my questions are directed towards HPX only. First and foremost on an interview on CNBC some very higher management person from your HPX company very explicitly said that you are going to list the company very soon, is that true?

Dr. Rajib Kumar Mishra: What exactly he said?

Mohit Kumra:I am very certain and I listen to him many times, he said that just like IPX is listed on the market even HPX is planning to list on the market is this true?

Dr. Rajib Kumar Mishra: As far as from PTC side we can say, because we right now we are in the analyst call for PTC. Let me tell you that, I am not aware that this company is going for any kind of listing at this point.

Mohit Kumra:Fair enough. But do you understand that you are a majority shareholder and this is the only way for us to?

Dr. Rajib Kumar Mishra: Yes. So, I clarified what I wanted to clarify.

Mohit Kumra:Okay, sir. My second question is that, what will be the real world effect of this market coupling thing which we are using or because one side is claiming that it's a game changer, the other side is claiming that nothing is going to happen, do you truly believe that something will come out of this market coupling thing?

Dr. Rajib Kumar Mishra: Market coupling is very much required as you can understand, there are many reasons. First, I would like to give you the technical reason why and the commercial reason why market coupling is very much required in this country at this point of time. And then I will tell you more about the commercial impact of this market coupling on our exchange and the other two exchanges. The important thing is, market coupling is required to have a very strong our market in India, where the anonymous buy and sale can take place on a platform which is neutral to both buyers and sellers. Now, what the market coupling we will do is, it will have create one national price which is free from any kind of aberration. Today, if you see every day in the night, right from six to seven in the evening, it reaches to the peak of Rs.10 and the entire evening the prices is Rs.10 and then there is no market operating, if it hits the market at 10 then there is no market. So, now, you are not very sure what to do with such kind of market where the prices are firm. So, therefore, the price shifts from the day ahead market to term ahead market which is a bilateral market. So, that's not a fair kind of a situation in a market. There are several other reasons why, there has to be one national market and the market clearing has to be done on a very neutral way. So, market coupling is required and it is not what I'm saying, it is what the PMR says that is Power Market Regulation 21 says, that this is required and this has to be notified on a particular date when the maturity of the market is there. And we feel that the market is mature enough, that this market coupling has to be there.

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The second point what you asked is, what will be the commercial impact of the other exchanges. We are not saying anything to hurt any other exchange, but at the same time for the national interest of a developed market to take place, we expect that the market needs to be coupled and if the benefit comes to HPX because of that reason, that is purely something which is consequential, but we are saying that the market need to be coupled for the reason that we expect that the market has to be fair and transparent and totally say anonymous. So, for these reasons we are advocating it and the government as well as the regulator is keenly trying to implement it.

Mohit Kumra:But what will be the real world effect for HPX if it happens, let's assume it happens because they have made it very clear that they are very interested in the government, what percentage of the market you expect will you once this is executed the market coupling?

Dr. Rajib Kumar Mishra: Let me tell you, I will not predict anything or I'll not give anything in future perspective. But to give you some perspective, I can always say, that the other segments of the market HPX and us, very short span of one year, they have almost garnered almost 1/3 of the market.

Mohit Kumra:Okay. So, is it fine for us, even as citizens of India to believe that a market which was monopolistic for a very, very long time will not remain so in the future, if market coupling is introduced, is that the right way of thinking?

Dr. Rajib Kumar Mishra: Without asking this question to me, you yourself have answered that if it is a monopolistic market it has to be something which is more transparent for the benefit of the end consumers. And that's what we are trying to convey in so many conferences and views.

Moderator:Thank you. We have our next question from the line of Narendra Khuthia from Robocapital. Please go ahead.

Narendra Khuthia: Sir my first question is regarding the PTC Energy divestment. So, last call, if I'm not wrong, you had said that it will be completed by June or July end, so is there any specific reason for the delay if you could share something?

Dr. Rajib Kumar Mishra: The process is well on time and we have uploaded everything in our data room and because of so many there are several of the projects look at it in different states and any serious buyer will try to have a proper due diligence before they submit their bid. And because of these reasons they are going into deeper dives and trying to get all the information required for such kind of bid, which they have completed more or less. And that's the reason why I announced that by the end of this month we will be in a position to give you more information on this divestment and what exactly the bids are.

Narendra Khuthia: Okay. And secondly on the PTC Financials. So, are we not in a position to rethink our stake sale, begin the talks again for that?

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