PTC India Limited (PTC.NS) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Earnings Conference Call for Q1 FY '26 for PTC India Limited. PTC India was incorporated in 1999 to undertake trading of power to achieve economic efficiency and security of supply and to develop a vibrant power market in the country. PTC is a pioneer in starting a power market in India and undertakes trading activities that includes long-term trading of power generated from large power projects as well as short-term trading arising as a result of supply and demand mismatches. In addition to the trading business, PTC has incubated technocommercial consulting business to develop power market for the C&I consumers, SECs, port trust, et cetera. Let us now begin with the introduction of the management team. We have with us today Dr. Manoj Kumar Jhawar, Chairman and Managing Director; Mr. Rajiv Malhotra, Executive Director and Chief Risk Officer; Mr. Pankaj Goel, Executive Director and CFO; Mr. Bikram Singh, Executive Director, Marketing; Mr. H.L. Choudhary, EVP, Commercial and Operations; and Shri Anand Kumar, VP, Investor Relations. [Operator Instructions] Please note that this conference is being recorded. I would now like to request Dr. Manoj Kumar Jhawar, CMD, to give his opening remarks. Thank you, and over to you, sir.

Good evening, everyone. I extend a warm welcome to all of you to our post earnings call following the announcement of our Q1 FY '25-'26 results. This call gives us an opportunity to share key insights into our company's performance and the long-term vision. We deeply value this engagement with our esteemed shareholders, our investors, partners and the representatives who play a pivotal role in our continued growth and success. During the first quarter of new financial year, while national demand of energy experienced a marginal dip of 1.2%, our trading volume grew by 13% to 23 billion units. This was achieved while maintaining a trading margin of INR 3.37 per unit. Notably, 60% of the trading volume came from exchange traded products, while the remainder came from bilateral long-term, medium-term contracts. Improved margin realization has also contributed to an 8% increase in the trading income. Just to recall, in the last quarter, we informed you that we have floated an invitation of expression of interest for 500 megawatts of renewable energy capacity. The response has been encouraging, and our team is working with project developers to finalize purchase and sale agreement at competitive rates. As the team developers, we will inform the shareholders and exchanges. Our product and service offerings are helping in retaining clients, which are C&I segment and increased business opportunities. We are bid consultant for renewable capacity development of around 1,000 megawatts in solar and hybrid mode. In the cross-border market, our operations continue across all 3 grid-connected neighboring countries, which is Bhutan, Nepal and Bangladesh. Energy flows to the Bangladesh remain stable under the agreed contractual framework with regular flow of payments to our accounts. Bhutan is experiencing rising year-round electricity demand, particularly during the winter months when the water availability for hydro plants declines. Similarly, in Nepal, we have commenced both import and export of electricity based on their supply-demand profiles. Looking ahead, we expect power demand to grow steadily at 6% to 8% per annum, although short-term volatility may arise due to transient weather conditions. A favorable monsoon is expected to create more demand and support this outlook. The guidelines for PST-based power will further accelerate the adoption of storage in the energy basket. Regulatory bodies are also actively fostering market reforms, including discussion on virtual power plants and standardization of exchange products, including amendment in power market regulations to ensure level playing field among exchanges traders and OTC platforms. I now invite our Executive Director and CFO, Shri Pankaj Goel, to present the financial highlights for the quarter. Following his presentation, we will open the floor for question-and-answer session. Thank you once again for your continued trust and support. We appreciate your participation in today's call.

Thank you, [indiscernible]. Good evening to all. Now I'll go through the financial performance of PTC India Limited on -- first on stand-alone basis for the quarter ended June '25 vis-a-vis the corresponding quarter June '24. So the volume has -- for the quarter has increased by 13% to 23 billion units from 20.5 billion units. Volume has increased mainly because of increase in exchange rate and cross-border trade. Operating margin from sale of electricity has increased by 8% to INR 78 crores from INR 72 crores. Total operational income decreased by 13% to INR 111 crores from INR 127 crores. The profit before tax stood at INR 141 crores as compared to INR 144 crores during the corresponding quarter. Profit after tax stood at INR 105 crores as compared to INR 106 crores. Total comprehensive income stood at INR 105 crores as compared to INR 107 crores. Earnings per share for the quarter stood at INR 3.54 as compared to INR 3.59 during the last corresponding quarter. Now I'll go through the financial performance on a consolidated basis for the quarter ended June '25. Volume has increased by 12% to 23 billion units from 20.6 billion units. Profit before tax from continuing operations has increased by 42% to INR 289 crores from INR 203 crores. The profit before tax has mainly increased on account of higher share of profit before tax from PTC Financial Services. Profit after tax from continuing operation has increased by 61% to INR 243 crores from INR 151 crores. Consolidated PAT from continuing operation and discontinued operation has increased by 28% to INR 243 crores from INR 189 crores. Total other comprehensive income has also increased by 28% to INR 243 crores from INR 190 crores. Earnings per share for the quarter on a consolidated basis stood at INR 6.59 as compared to INR 5.87. Thank you.

So now we can have the floor open for question-and-answer session.

[Operator Instructions] We'll take the first question from the line of Mangesh Kulkarni from Almondz Financial Services.

I just wanted to ask about now our subsidiary, PTC Financial Services, has also reported very good numbers and giving very good pictures on the recovery front in the next quarter also. So are we expecting any special dividend from the PTC in this coming financial year? As well as what -- are we coming back to our disinvestment plans for the PTC, what are our -- PTC financials? So what are our views on the subsidiary now?

Two things. Regarding any special dividend, I mean, the matter has to be considered by the Board. Whenever a consensus emerges that any dividend is to be declared, we shall definitely be making an announcement. Here, I would not like to go further than that. That is one thing. Second thing regarding disinvestment of PTC Financial Services Limited. Board is seized of the matter, as I had told in earlier conference calls also. This matter is being actively discussed. And as and when any consensus or a directional view appears from the Board, we shall inform the market. Right now, this matter is under consideration of the Board. So I cannot comment more than that.

Okay. sir, and how do we view our prospects for the Hindustan Power Exchange after this new discussion came on the connectivity of the exchanges? Coupling...

Yes, market coupling is something about which we have been, since a very long period, advocating. We believe that it is a good development. It is a favorable development. It will help consolidate the very, very fragmented markets. It will bring in competition, and it is likely to help the HPX significantly. So we hope that this is going to be another business driver for us going forward. Market coupling would definitely help HPX. And since we own 22.5% of the HPX indirectly, benefits would accrue to PTC.

And sir, these exchanges have also started electricity futures. So PTC as a trader is participating in this, particularly MCX and all these things?

Yes. Actually, I mean, this is a new development recently. And in today's AGM itself, we had put up a proposal before our shareholders to allow us to participate in this market in a significant manner and represent our clients and trade on their behalf. So I hope [Foreign Language] when the final results of AGM are announced, we will have necessary authorization from our shareholders also in this regard. And yes, we are in discussion and continuous engagement with both NSE as well as MCX where these future products will be launched, and we intend to participate meaningfully in these matters.

Mr. Kulkarni, does that answer your question?

Thank you very much, sir.

We'll take the next text question from Darshika Khemka from AV Fincorp. And the question is, what is the reason that surcharge income has been recognized as other income, which was a part of other operating income in the last quarter?

I would request our CFO to respond to that.

So you know that the -- historically, we were treating the surcharge income in our other operating income. So now the recently in '24 and early '25, the Institute of Chartered Accountant to the Advisory Committee has opined in some other case that this type of surcharge income and surcharge expenses has to be shown in other income and other -- and interest expenses, finance costs. And in that regard, the -- our -- we have a discussion with our statutory auditors also. And we have also examined the various -- of our promoters also, like they are the big generators and they are also receiving surcharge expense -- income also so as per their balance sheet of the promoters and other traders also. So they are also showing this surcharge income in the other income. So accordingly, on a prudent basis and to be more presentable, we have also regrouped the figures actually instead of other operating income to other income also. So that is the only reason, but there is no financial implications of the same.

So in summary, it is compliance of the regulatory directives and the practice being followed in peer companies. So this decision has been taken in consonance with that and in consultation with the auditors.

We'll take the next question, voice question from the line of [indiscernible], an individual investor. [Operator Instructions]

Am I audible, sir?

Yes, you are audible.

What I'm asking, the question is a matter of transparency and decision making process of PTC India. Since last 5 years, the divestment of PTC India Financial Services is pending. No clear answer is given to investors from parent company regarding its divestment. We invested in PTC India [Audio Gap] a noncore business, but still you are not -- you are engaged in financial services business. Now government announced the implement of market coupling from January 2026. In this situation, management should concentrate more on core business. What is your real stand with the divestment of PTC in the financial service, sir?

Sir, as I told you earlier, if I may recapture this, previously, the Board of the PTC had taken a decision that we will go for disinvestment of PEL as well as PFS. At a later stage, the process for this investment of PEL was taken forward, but a hold was put on the disinvestment of PFS. At a later stage, we concentrated more on disinvestment of the PEL, and that has been successfully concluded, as is known to all shareholders. Now again, that question has come up for consideration of the Board, and it is under active consideration of the Board. Right now, unless and until a decision has been taken by the Board, I cannot really give a straitjacket answer to this question [Foreign Language] what we are going to do, when we are going to do. Unless and until Board itself takes a call, it cannot be responded like that.

It's not canceled, no, sir?

No, definitely not canceled. As I told you, this matter is under consideration of the Board.

We'll take the next text question from [ Harshit Singhania ] from RoboCapital. And the question is, is there any quantifiable impact from market coupling on HPX?

Actually, HPX is likely to benefit from this market coupling thing. And if we examine the entire market scenario, the collective segment has got two components. One is the DAM and another one is the RTC. So in the DAM component, the volume traded is roughly around 80 billion units. And if we multiply the INR 0.04 per unit margin, which is earned on all power traded in the DAM market, that gives us a revenue potential of around INR 240 crores per annum. That was basically 100% concentrated in IEX earlier. Now with this coupling thing happening, the exchange which is able to provide better services to the clients, the exchange which has got better connect with the clients, someone who has got a better technology platform would possibly have a real shot to, I mean, earn some volumes out of that market. So that remains to seen -- to be seen as to how much of that 100% concentrated market from IEX can be taken away by HPX. But currently, it is 0. So I would say that journey only upward.

The next text question is from Suyash Bhave from Wealth Guardian. And the question is, PTC holds 22% in HPX. Due to that, they cannot trade on it. Now post market coupling, will PTC look at reducing stake in HPX below 5% to start trading on it?

Our investment in HPX was a strategic one. Now when to divest, whether to divest would be a call to be considered in an appropriate point of time. At this point of time, we would be basically interested in watching the market as it evolves post this market coupling thing. But a decision would be taken in the best interest of both HPX and PTC so that long-term value to the shareholders is accrued.