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

Good evening, ladies and gentlemen, and welcome to the earnings conference call for Q2 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 techno-commercial consulting business to develop power market for the C&I consumers, SEZs, port trusts, et cetera. Let us now begin with the introduction of the management team. We have with us today Dr. Manosh 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; Mr. Rajiv Maheshwari, Company Secretary and Compliance Officer; Shri Mukesh Ahuja, VP Finance; 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, Chairman and Managing Director, to give his opening remarks. Thank you, and over to you, sir.

Thank you. Good evening, everyone. I extend warm welcome to all of you to our post earnings call following the announcement of our Q2 financial year '25-'26 results. I'm joined today by core members of our management team, as already introduced by the moderator. 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 stakeholders, our investors, our partners, shareholders and their representatives, who play a pivotal role in our continued growth and success. During the first half of the new financial year '25-'26, with the national demand of energy grew by only 1.07%, our trading volume has grown by more than 11% to 49.22 billion units. This was achieved while maintaining a trading margin of 3.54 paisa per unit. Notably, 50% of the credit volume came from exchange-traded products with the remainder coming from bilateral long-term and medium-term trades. Improved margin realization has also contributed to a 10% increase in the trading income. Just to recall, in the last quarter, we had informed about evaluating renewable energy long-term PPAs. So I'm happy to inform that in this quarter, we have executed PPA of 100-megawatt and plant is expected to get operational by first quarter of financial year '27. We have floated an expression of interest for further 500-megawatt of solar plus coupled with 250 megawatt up to 1,000 megawatt hour energy storage system. The response from prospective bidders has been encouraging, and our teams are evaluating these products. Our product and service offerings are helping in retaining clients in the C&I segment and also in other business opportunities. We are a bid consultant for renewable energy capacity development of around 1,000 megawatts in solar and hybrid space. In the cross-border markets, our operations continue across all three grid-connected neighboring countries, which is Bhutan, Nepal and Bangladesh. Energy flows to Bangladesh remains stable under the agreed contractual framework and the regular flow of payment to our account is happening. Bhutan is also experiencing rising electricity demand, especially during the winter months when water availability declines. Similarly, in Nepal also, we have commenced both import as well as export of electricity based on their demand/supply profiles. Looking ahead, we expect power demand to grow steadily at 6% to 8% annually, although short-term volatility may arise due to transient weather conditions. Regulatory bodies are also actively fostering market reforms, including discussions on virtual power plants and standardization of exchange products, amendment in power market regulations to ensure a level playing field among exchanges, traders and obviously platforms, fractional access to the transmission systems and some other developments. So thank you once again for your continued trust and support. We appreciate your participation in today's call. Thank you.

Thank you, sir. I would now like to request Mr. Pankaj Goel, Executive Director and CFO, to discuss the quarter's financials with everyone. Thank you, and over to you, sir.

Yes. Good evening to all. Thank you, CMD sir. Now I will go through the quarterly results September '25 and half year results September '25 on a stand-alone basis. First, I'll go through the quarter results. The volume has increased by 9% to 26.2 billion units from 24 billion units. Volume has increased in almost all segments of trade, that is long-term, medium-term, cross-border and exchange. Total operational income has increased by 11% to INR 137 crores from INR 123 crores. The operational income has increased mainly due to increase in cross-border trade and long-term trade. Profit before tax has increased by 15% to INR 180 crores from INR 157 crores. Profit after tax has increased by 15% to INR 134 crores from INR 117 crores. That is in line with the PBT. Total comprehensive income has increased by 15% to INR 134 crores from INR 116 crores. Earnings per share for the quarter stood at INR 4.52 as compared to INR 3.94 during the last quarter. Now I will go through the half year results. For half year, volume has increased by 11% to 49.2 billion units from 44.5 billion units. Total operational income has decreased by 1% to INR 248 crores from INR 251 crores. The operational income has decreased mainly due to decrease in net rebate income in the first quarter of FY '26. Profit before tax has increased by 7% to INR 321 crores from INR 300 crores. Profit after tax has increased by 7% to INR 239 crores from INR 223 crores. Total comprehensive income has also increased by 7% to INR 239 crores from INR 223 crores. Earnings per share for the half year stood at INR 8.06 as compared to INR 7.53 during the last half year. Now I'll go through the consolidated results for the quarter. Volume has increased by 8% to 26.2 billion units from 24.3 billion units. Profit before tax from continuing operations has increased by 36% to INR 298 crores from INR 219 crores. Profit after tax from continuing operations has increased by 36% to INR 222 crores from INR 163 crores. Consolidated PAT from continued operations and discontinued operations has decreased by 5% to INR 222 crores from INR 234 crores. Total other comprehensive has also decreased by 5% to INR 222 crores from INR 233 crores. Earnings per share for the quarter stood at INR 6.46 as compared to INR 7.34. Now I'll go through the half year consolidated results. Volume has increased by 10% to 49.2 billion units from 44.9 billion units. Profit before tax from continuing operations has increased by 39% to INR 587 crores from INR 422 crores. Profit after tax from continuing operations has increased by 48% to INR 465 crores from INR 314 crores. Consolidated PAT from continuing and discontinued operations has increased by 10% to INR 465 crores from INR 423 crores. Total other comprehensive income has increased by 10% to INR 465 crores from INR 423 crores. Since the PAT after minority interest has decreased to INR 386 crores from INR 391 crores, EPS has also decreased to INR 13.05 from INR 13.21 on a consolidated basis for the half year ended. Thank you.

[Operator Instructions] We'll take our first question from Vishal Mehta from Oaklane Capital.

Sir, am I audible?

Yes. Please go ahead.

Sir, I have three questions. The first question was regarding our subsidiary, HPX. If you could just throw some light on -- it's almost in one month we'll have the market coupling which will become active. How prepared do you think is HPX in terms of its software, the operations? And what kind of investments, if at all, we need incrementally to get on par with the largest exchange? And what is our internal estimate in terms of market share gains and volumes maybe in the next 1 to 3 years coming from that exchange? So that is the first question. Should I go ahead with the questions, and then maybe you can answer?

Yes, sure.

The second question is, sir, we have close to INR 3,000 crores of cash on our balance sheet. Just wanted to understand the perspective of how you internally are looking at utilizing this, I mean, if there is any mix in which how much will go in supporting the existing business in terms of working capital, how much will go to the new ventures like the JV we planned, or how much of that do we intend to pay out to the shareholders. If you could just highlight that, that would be great. And the final question is, sir, we've just recently announced the JV. Now that is also in the renewable space. And we just sold our assets in PEL which were also in the similar business. So how is this venture different? And what is our expectation from this in terms of scale? What is the road map? And if you could just highlight what would be the investment requirements for this will be great. Those are my questions.

All right. Thank you. So your first question related to HPX. And with the onset of market coupling, you wanted to know the preparedness of the exchange. So what I can say with certainty is that this exchange is basically operating with a very, very modern technological platform, and we are having Bombay Stock Exchange as the tech support provider. And the exchange also has got a very, very competent IT team. So I absolutely see no reason as to there should be any issue regarding tech support, our technology not able to deliver what is required. I see absolutely no reason over there. In my considered professional opinion, the exchange is functioning very well and functioning with a very latest state-of-the-art technology. So that answers your questions regarding the preparedness of the exchange. Regarding the market share, I mean, it is something which will evolve over a period of time. But we are expecting and we hope that because of its service offerings and its ability to connect with clients, this HPX also gains significant market shares. So time will tell, but we are hopeful. So that is regarding the HPX. Regarding INR 3,000 crores cash utilization you have asked me, so out of that, you will see that around INR 1,000 crores we have to keep as working capital deployed in the main trading business of the PTC. And that is a seasonality. Sometimes with some clients, the outstanding position may increase, sometimes it may decrease. And this is a very, very high-volume business. So basically, you need to be ready with adequate cash flows to maintain your trading operations. Regarding INR 1,500 crores to INR 2,000 crores, we definitely need to, I mean, invest into some business ventures wherein we are able to ensure visibility of the revenue for coming decade or so. And that relates to your third question regarding the JV. So one such venture which we have envisaged is investing in the renewable energy assets in collaboration with NLC Renewable Energy Limited (sic) [ NLC India Renewables Limited ]. So your question, the third question and the second question, if I were to answer in a joint manner, first, the query of you is that why we sold the PEL assets if we were to invest again into the renewable energy asset. So my answer would be that in the PEL, we were the sole owners. And frankly speaking, we are not a very large asset operating company. We got a very good price. All our cash flow models predicted what we were to derive from that venture. And the deal at which it happened with the ONGC, it was a very, very profitable deal. So we went for that. That is one thing. But in this particular venture, we will not be actually required to deploy a large team to operate these assets because basically this is a venture with the NLC. NLC Is a very, very large and very established player already in the field of not only renewable energy but conventional energy. So they have got wherewithals and the operating team and the knowledge, know-how and all other things. So basically, our role and responsibility would be related to facilitating the trading and finding the consumers, which I think is our forte. But to be able to get those trading rights and to get into that space, we need to collaborate with them. So this is a win-win kind of situation wherein multiple lines of products can be thought over a period of time. We will start with the plain vanilla distribution company bids wherein someone is bidding. And if we think that it is making sense for us to put prices and if it come, L1 in those tenders, then some capital definitely would be put up. But at a later stage merchant capacity may also come, consumer-centric capacities may also come. So this is a good beginning. Now regarding deployment of capital in this particular venture, initially we are thinking about investing INR 500 crores or so. Since we'll be a minority partner, almost 3x of this amount would come from NLC. So that would make a decent corpus of around INR 2,000 crores. And on that, we can further leverage that amount to invest into some big-sized projects. Initially we are thinking like this. Time will tell how this venture is going further, but we are very hopeful. And this addressed partly your question regarding capital deployment as well. So I hope I answered your questions.

Great, sir. So just one thing in that. You said INR 1,000 crores will be used for working capital, INR 1,500 crores for that. So balance, you would be able to pay out? Or is that the intention?

No. I think if this JV is INR 500 crores we are thinking, then there are other opportunities also which we are exploring. We definitely -- the energy sector is a happening sector. This is a growing sector and then this great energy transition is happening before our eyes. So it would be not very wise to, I mean, distribute the dividend. Rather, we would like to put in some productive assets to ensure long-term revenue assurance for the company for the coming decade or so.

We'll take one text question from Ragini Pande from Elara Capital. The question is, what is the short-term and long and medium-term volume in Q2 FY '26? Second question is what -- yes, go ahead, sir.

Yes. I would request Pankaj to answer that.

So the long term -- we take consolidated, long-term, medium-term and cross-border together as a long term. So the long-term volume is around 12.2 BU and short-term volume including exchanges, 13.8 billion units. So that is to say, 53% of the total volume is from the short term and 47% of the total volume is from the long-term and medium-term contracts in the quarter.

The second question is, what was the trading margin in short-term and long and medium-term? And what was the overall trading margin?

Yes. So in short-term trade, the total including exchange is around INR 0.85 paisa in the quarter. And in the long-term trade, it is around 7.02 paisa.

And the last question from her is, what was the revenue from HPX in Q2 FY '26?

Yes. In FY '26?

Yes. Half yearly, you are asking? '26 is not yet complete. Q2.

So yes, in Q2 September '25, the profit before tax for HPX is around INR 1.26 crores. And after tax, it is INR 47 lakhs.

We'll take our next live question from [ Chanamolu Halaguri ], an individual investor. Since there is no response, we'll move on to the next question from [ Suyash Bhave ] from Wealth Guardian.

So yes, I have a few questions. First is in H1, we have done almost 50,000 volume. So are you on track to cross 1 lakh volume for this FY? And what would be the volume guidance for the next 2 years as well? So that's my first question. Second is I can see that our long-term mix has improved well as against past few quarters. So in our investor presentation as well, we talked about two long-term PPAs. One is the 100-megawatt solar power agreement and other is the 500-megawatt solar power agreement with the additional storage. So is it that we are now having a broader strategy in place to keep increasing the long-term mix? So what would be your guidance on the mix going forward? And finally, sir, we own 22% in HPX. Is there any such regulation or restriction that for any shareholder of HPX, so no other player can have more than 20% stake in us? For example, one of our existing promoters acquiring more than 20% stake together and increasing their stake in us beyond 20%. Is there any such regulation which stops them? Because we own 22% in HPX. So these are my three questions.

Well, allow me to answer your third question. First and the second question, I will refer the matter to the Director Marketing and the CFO. Regarding your third question which pertains to the equity holding in the HPX, there is a restriction from the regulator that anyone who is holding more than 5% equity in that exchange cannot become a trader member. So that restricts our own trading on the HPX spectrum. So that is the regulation. One cannot have more than 5% if he wants to trade on that exchange. So that is the third question. Regarding first question which pertains to your guidance on the long-term volumes and overall volumes, Bikram, would you like to inform?

Yes. With regard to our volumes, actually it is difficult to say where we will close the year. We are definitely looking at crossing last year, but let us see how it pans out. I don't think we'll reach 100,000. That number looks a little too ambitious right now. And with regard to our focus on long term, definitely, our focus has been on long term. And these PPAs, we are looking at signing. And the volume, of course, will come in the next 2, 3 years as and when the plants get commissioned. The current volume increase is from the current long-term agreements only based on some weather patterns and scheduling by the utilities. There is an increase under the current arrangement only.

So I would like to clarify this one thing. As you have said that in the half year, we have done around 50 billion units. So for the year, it will be 100 billion units. But as you are aware, that ours seasonal, this thing. And every time if you go into the history, first half is because of the summers and all that, the volume is high. But in the second half, because of the winter season and all that, our volume is low. So it is not just a double. But as ED Marketing has explained, that naturally, we are looking for crossing the last year's volume in line with the same year.

We are confident and hopeful that we'll cross at least the last year's volumes.

[Operator Instructions] We'll take a text question. The next text question is from [ Ravindraji ], an individual investor. In PFS con call, MD and CEO said they are having a plan to raise the fund of around INR 300 crores to INR 500 crores through issuing preferential shares. And here, you said the process of divestment of PTC India Financial Services is under active consideration of Board. Which one is correct? Why all you are misleading all?

We are definitely not misleading and if you see that both are saying, in a sense, same thing. If he's saying that they are going to raise the equity and if we are saying that we are going to dilute our holding, both being one and the same thing, that is one thing. But yes, the active action in this regard is subject to approval of the PTC Board and that matter is under the consideration of the board. That much I can tell you. We have engaged services of a reputed consultant in the field of this private equity and equity restructuring, et cetera. So we are awaiting the report, and that report will be discussed in the Board. This much I can give as of now.

[Operator Instructions] The next text question is from Rupesh Sankhe from Elara. Dear sir, what is average expiry years of our long-term portfolio of 7,500 MV? How do you see bilateral market as exchange prices are very low? Also exchanges have now long duration contract products available for participants.

So third thing is key exchanges are currently not having any long-term product. The maximum time period available for any exchange to operate is 3 months only. So beyond that, they cannot do any trading. And having the long-term contracts on the exchange platform is, technically speaking, a lot many challenges have to be overcome. Very importantly, in the long-term contracts, there is always a question of having a very robust settlement mechanism which is very, very difficult thing to ensure in long-term contracts because not only the energy prices, but the fixed charges and the additional charges relating to change in law and so many other complications come into the play. So that is one thing that currently, the long-term markets and the short-term market or the exchange market are very, very different thing. And both are growing, no doubt. As of now, almost 85% power is being traded on the long-term contract. So that is likely to continue. 15% or less than 15% is happening to the short-term markets. Within the short-term market, the bilateral contracts are slowly and gradually moving towards exchange products. So that shift, we are watching and that is happening. And of course, we are part of both the markets. So directly, it does not affect us. It is helping us in our business. Overall volume is growing in exchange as well as long term. So that was your third thing. But what else you asked?

I'll repeat, sir. How do you see bilateral market as exchange prices are very low? Also exchanges have now long duration contract products available for participants.

Okay. So how do I see the bilateral contracts? One thing is very clear. If the prices and the exchange remain low, the volume of the trade on the exchanges or even in the bilateral market increases significantly. So basically, that helps us because there are more opportunity to trade. And long term, as I told you, long term will co-exist. Because for adequacy, the long-term market has to remain there, and that is a very different market from the short-term or exchanges.

We'll take a live question from Vishal Mehta from Oaklane Capital.

In context to PFS, just wanted to understand, we are planning to dilute our stake over the medium to long term. But there has been a development where 3 independent directors resigned simultaneously. So just wanted to get your perspective, how do you view that situation? And is there any concern that you see impacting the business?