PTC India Limited (PTC) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. And welcome to the Earnings Conference Call for Q1 FY '27 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 pioneer in starting a power market 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 integrated techno commercial consulting business to develop power market for the C&I consumers, SEZs, or trusts, et cetera. Let us begin with the introduction of the management team. We have with us today Dr. Manoj Kumar Jhawar, Managing Director and Chief Executive Officer; 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; Shri Rajiv Maheshwari, Company Secretary and Compliance Officer; Shri Mukesh Ahuja, VP, Finance; and Shri Anand Kumar, VP of Investor Relations. [Operator Instructions] Please note that this conference is being recorded. I would now like to request Dr. Manoj Kumar Jhawar, MD and CEO, to give his opening remarks. Over to you, sir.

Thank you, and good evening, everyone. 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, partners, shareholders and their representatives, who play a pivotal role in our continued growth and success. During the first quarter of new financial year, while city generation increased by 9.38% by 23 billion units, with contributions mainly coming from thermal and renewable especially solar. In the corresponding period, our trading volume grew by 12% to 25.78 billion units. This was achieved while maintaining a trading margin of [ INR 3.35 ] per unit. Notably, 60% of the trading volume came from exchange-rated products with the remainder coming from bilateral short-term, long-term and medium-term trends. Improved margin realization has also contributed to an 11% increase in trading income. Our products and services offerings are helping in returning the clients in C&I [ cement ] and increased business opportunities. Recently, we have signed a long-term PPA of 1,200 megawatt from procurement of solar power from NTPC Green. The cross-border markets also, our operations continue across all the 3 grid connected levering countries, which is Bhutan, Nepal and Bangladesh. Energy flows to Bangladesh remained stable under the agreed contractual framework with regular flow of payments to our accounts. Bhutan is experiencing rising [indiscernible] around electricity demand, especially during the winter months when water availability declines. Similarly, Nepal, we have commenced both imported and export of electricity based our supply-demand profiles. Looking ahead, we expect power demand to grow steadily at 4% to 6% annually, all the short-term volatility may arise due to transient weather conditions. The National Electricity Policy Draft 2026 has been released by government of India, which helps for an increase for [indiscernible] electricity consumption to 2,000 kilowatt hour by 2030 and over 4,000 kilowatt hour per person by 2047. The same is expected to be achieved with increased market and regulatory reforms and competing electricity markets. All such market cues are positive for trading ecosystem. With this, I would like to close my opening remarks. Thank you once again for your continued trust and support. We have appreciate your participation in today's call. Over to moderator.

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. Thank you, [indiscernible], and good evening to all of you. Now I will go through the financial performance of PTC India Limited on a stand-alone basis for the first quarter of '26. Volume has increased by 12% to 25.8 billion units from 23 billion units. The volume has increased only due to increase in our exchange [ rate ]. Total operational income has increased by 2% to INR 113 crores from INR 111 crores. Profit before tax has decreased by 32% to INR 96 crores from INR 141 crores. A decrease in profit before tax is mainly on account of lower net surcharge income, and the rebate income, as has been said earlier, this is due to the improved liquidity of the discourse. In line with the EBT, PAT has also decreased by 33% to INR 71 crores from INR 105 crores. Total comprehensive income has decreased by 33% to INR 70 crores from INR 105 crores. Earnings per share for the quarter stood at INR 2.39 as compared to INR 3.54 during the last corresponding quarter. Now I will go through the financial performance of the -- on a consolidated basis. Volume has increased by 12%, 25.8 billion units from 23 billion units. Profit before tax has decreased by 48% to INR 151 crores from INR 289 crores. This is -- the decrease in PBT is basically on two account that there is a decrease in the profit before tax of PTC India also and the profit before tax of ETC Financial Services, our subsidiary, has also decreased, as there was a reversal of INR 82 crores of [indiscernible] provision in the corresponding quarter ended June '25. Profit after tax has decreased by 54% to [ INR 101 crores ] from [ INR 245 crores ]. Total other comprehensive income has decreased by 54% to INR 112 crores from INR 243 crores. Earnings per share per quarter stood at INR 3.31 as compared to INR 6.59 during the last corresponding quarter. Thank you.

[Operator Instructions] Our first question from the audio bridge comes from the line of [ Ayush Gupta ] from [ Consortium Securities ].

Yes. So I basically wanted to ask like the PPA, which we have the long-term portfolio that we have, how much will it expire in the next 1, 2, 3 years and so on?

How much of our long-term contracts are going to expire in the next 3 years?

Nothing is likely to expire in the next 3 years.

Okay. So if nothing is likely to expand in the next 3 years, what is the average expiry of our contracts, if it's higher than that?

We will provide the data. I mean, is it available with us combined? Okay. So kindly said that query through e-mail, we shall be responding there, because the data is not readily combined now with us.

Sure, sir. I'll just ask another question. So around 80 gigawatts of coal capacities to be added in to the CEA by 2032, out of which 40 is already under construction. So when I was looking at through the list, I couldn't see any power trading companies in the list of PPA signed. So if power trading companies are not signing any PPAs in the domestic market, what does the future of this industry look like?

Actually, you have to understand that for the long term trades now, in the [indiscernible] are not permitted to bid, so tenders cannot represent any generator. Long term contract, particularly for conventional energy, which is thermal, has to happen directly between the generator and the utility. So obviously, you would never find any new content happening through the trade in this ecosystem. What is happening is, I mean, there is a large variability between data and requirement of the power and the nighttime requirement of the power. That is one thing. There is a large variability between seasonal requirements of the power between ends. someone require power -- power during season, someone required high quantum of power during winter season, someone requires high quantum of power during summer seasons, and that depends on local situations. So there is already a gave between what kind of context a utility is having and what kind of quantum it can effectively utilize. So those unbalances are the trading opportunities for the traders, and those kind of trades happen between the medium term, short-term exchanges. So that is where the trading industry future lies. That is one thing. Second thing, we do believe that the renewal energy markets, which are currently appear to be saturated, they shall also present the trading opportunities, I mean, with the storage technology is in future. So you may see some traders managing heavy long-term contacts with the renewable energy generators, possibly investing or procuring the sources for storage of energy and then providing that electricity during the shortage hours. So those are the evolving scenarios which we see. And that is where the opportunities for the trading lies.

Got it, sir. So essentially, our average margins, they will go down if we are focusing in the future mainly on the exchange side?

Exchange markets typically do provide a lower margin, but then that has to be, I mean, complemented with the medium terms and possibly going forward, we might be having this storage kind of contracts wherein possibly we will procure the direct data and charging power during the abundant hours and possibly would look for the opportunities to sell that power during the evening peak. So margins may depend upon the evolving portfolio and evolving situation.

Our next question comes from the line of Vishal Periwal with PL Capital.

Am I audible?

Sure. You are.

Okay. I think, briefly, you mentioned on the battery capacity and then probably we can increase our marginal spread. So have you done any tie-up for the same? And I mean, any color that can be provided for this?

Right now, we are in discussion mode. So I cannot reveal much details, but we are, I mean, working on it. That much I can say.

Okay. So for the same, we'll be working more like an asset owner, or we are tying up with the battery?

Yes, we are looking both type of opportunities, whichever comes cheaper. I mean there is an opportunity cost of the capital if we invest capital and then there is a cost to be paid in the form of rentals or a long-term service provision from any storage device. So we are, I mean, evaluating the options. That is what I can say right now.

Okay. Okay. Sure, sir. And second, in terms of our long-term capacity that is there. So in this quarter, we have seen year-on-year decline. So I mean, any particular capacity that has been taken off or it's a lower PLF from those contract for us?

Yes. Actually, this is mainly on account of lesser generation from hydro projects where we have long-term agreements. And as you are aware, it's there in the news and this also that hydro generation is below last year's level. So the long-term decline is mainly on account of less hydro generation.

Okay. And sir, just to continue with that, the long-term capacity, how do you see this steadily increasing in financial year '27 in terms of new capacity that we could add and then in FY '28 also for us?

Long-term capacity, I think sir explained that there is a constraint there from the regulatory side. So we are not expecting any -- to add any long-term contracts in that duration. However, the other initiatives on battery and those types of seasonal and time of the day differences, those we will be taking advantage of.

Okay. No, but then, sir, the NTPC Green tie-up that we have done, so is it for a long term? And how do we consider that tie-up?

Yes, that is a long term, but there, it will take some time to come online. So maybe FY '29, we can expect that.

'29. Okay. And how about, sir, the [indiscernible].

Urja is under construction right now. And so we don't have the exact time line, but we are expecting maybe around December, it may again pick up.

December this year?

Yes, December this year or March this year, we are not very sure on that because the construction is a little difficult also during this monsoon period. So it is difficult to give an estimate. But yes, somewhere within this financial year, it should start. And it is also coming up in stages. So it's not that it will start 100% on the first day. So maybe 40%, 50% generation, something like that is expected.

Okay. Got it. Got it. Got it. And then in terms of CFO, sir, did mention decline in rebate and surcharge. So sir, in this -- I mean, like surcharge, one can understand there is enough liquidity with the SCBs. But what could be the reason of a decline in rebate for us because [indiscernible].

That debt also is actually related with the liquidity of the discounts. You see whenever there is a contract, there is a provision for availing rebate. If generator to whom I have to pay, I pay before time, I earn a rebate. And if the distribution company, which has procured power from me pays before time, they also earn a rebate. So up till now, many times, we look for the opportunities where we can prepay the dues and we recover it later from the discount. So obviously, when discount is paid at a later date, they are unable to avail the rebate. And we have made the timely payment, so we avail the rebate. So the net rebate is what is reported as operating income. And debt has declined because wherever possible, discounts also utilizing the rebates.

Okay. And then one last thing from me, sir. I think we have given a decent dividend in this quarter. So I mean, like any color in terms of how this number could pan out for us on a full year basis or any change in the trajectory of dividend payout that we foresee for us in PTC India, sir? That's my last question.

This dividend, which we declared yesterday has to be seen in the context of the earlier deal from which we earned a significant cash when we sold our PEL assets to NGC. So based on discussions with various stakeholders, currently, management and the Board decided to recommend that interim dividend, but that should be seen as a onetime measure. Obviously, this kind of dividend, INR 23 per share cannot be sustained, should not be expected every year. This was onetime special dividend kind of thing. Other than that, we will try to maintain the trajectory which we have been following up till now.

We take our next question coming from the line of [ Kirti Jain ] with Neon Financials.

Yes. Sir, my question is with regard to PTC India Financial Services Limited, our subsidiary. It's actually this company has almost completed 20 years of operation now. And it's like in value terms, we have not received much value from this investment in so many years. So my question is basically what is our outlook and what is the future we are seeing in this investment? And do we continue to hold it? Or is there any -- what is our outlook on the sale?

So there are 2 things. Of course, we too are, I mean, concerned about I mean, less than spectacular performance from PFS, of course, we too are concerned and worried. And this is in the [indiscernible] of the management and the Board. Earlier also, I've been telling this to the investing community at last that basically, we intend to start the process of disinvestment of PFS. I was trying to seek approval of the Board. So now I think there is a consensus with the Board that we should be looking for ways and means. As to be a strategic direction of our investment in PFS, we have engaged the services of SBI for this purpose. We shall be exploring options regarding what would be the best way to recover, I mean, realize the best value for our shareholders.

Sir, but you yourself are present on the Board of PTC India Financial Services, Mr. Malhotra is present. And definitely, it is in an industry which is doing really well in terms of infrastructure financing. Then basically, what is something which somebody else who will come in and we'll be able to do it, what PTC India has not been able to support to PFS in that terms, if you can throw some color on it.

Rajiv Malhotra here. I'll try and answer that because it looks like a bunch of questions. It doesn't look like one question. So let me try and address this in parts. One -- the reason why PTC decided and it continues to believe that it should be looking to monetize or divest is -- has nothing to do with the business per se. It is a question of does it have a strategic fit with PTC. Having answered that question, the process, again, was put on hold for some time. And you're recently aware and we've disclosed that, that pause has been taken out. As MD sir just explained, a transaction adviser is on board. So how we go about monetizing, divesting is a matter of process. The intention is to get the best value for the shareholders of PTC and PFS. Now what is it that we intend to do while we are holding this? -- simple one line answer is build value. So the only mandate with which we are working as part of that Board, as part of the shareholder points is that we build value or rebuild the portfolio from the current level where it is. If any of your questions or any part of your question is unanswered, please ask me that again.

[Operator Instructions] We take our next question coming from the line of [ Shivan Sarvaiya ], an individual investor.

Yes, I have a couple of questions. The first one being on Note #8 on the stand-alone financial statements regarding the provision of INR 17.4 crores. Could you just elaborate and explain what is this exactly? Give some color here.

Actually, I mean, in the power trading business, many times you see that on the one hand, PTC being the intermediary on the one hand, there is a generator and on the other hand, there is a utility. Now oftentimes in the long duration contracts, it so happens that some change in the event or some reinterpretation of the contract events or any other unforeseen situation when the contract was entered into arises. So oftentimes, these kind of disputes do get into the litigation. Sometimes it is our, I mean, consistent stand that if there is any liability on account of any contract and if it is a matter of dispute between the buyer and the seller, then we shall be paying to the seller when we receive the money from the buyer. So in this instant case also, there is a generator on one side who has been asking and raising demand of certain sum of money because of some legal disputes on PTC. Consistent stent of the PTC has been that we shall -- we shall be paying this amount when we recover it from the concerned utility. Now the matter has been decided by the adjudicating authority, which has said that you first pay and then you take steps to recover it from the counterparty. So for payment, we are creating this provision. We still feel that when the question of recovery from the concerned counterparty comes, it may somehow become a matter of further litigation. So in the best interest in consultation with the auditors, we have recognized the liability. We shall be raising our claims on the counterparty. We shall be pursuing our legal means. But right now, there is no clear visibility regarding recoverability from the counterparty. Therefore, this provision has been made.

Okay. Sir, the other one was on the debtors' part. Could you just help us with the absolute debtor amounts as at June 30?

Yes. The absolute debtors amount on June '26 is INR 4,469 crores.

Okay. And sir, could you help us with like give some color in the -- within this INR 4,469 crores, who would be your top 5 debtors?

Yes. Yes, like on 30th June, we have [indiscernible].

Like these are -- the aging of these debtors is pretty high. So what would be our ROE what would be our aim to earn an ROC on these debtors?

No, no. The aging of these debtors are not long actually. So the aging of the debtors only -- which are on a back-to-back basis means that there are debtors and correspondingly, there are creditors. So this -- as MD sir has already explained, there are bills regarding change in law, compensation, et cetera. So on -- in these type of cases, when we receive the money from the buyer, then we pay it to the seller. So it means till the time we don't receive the money. So it has been shown in debtors also, and it has been shown in creditors also on a back-to-back basis. So only for that such amount, you may be seeing as on a back-to-back basis on a higher period basis. But as far as the PTC exposure is concerned, so that is not more than -- I will say, not more than 60 days, wherein PTC has taken an exposure and that is pending.

Okay. Okay, sir. And sir, in these contracts, sir, like when -- how do you price for these contracts such that we take -- so that we are rightly pricing for these risks and we earn a return on capital, which is respectable?

There are 2 things to look into this. Actually, pricing is not entirely into the hands of the PTC. Basically, you have to compete on your bid. So competitive landscape also depends upon the counterparties, whether they are good and timely pay masters, whether they are not, whether we will face based on our past experience, some challenges in recovery whether we will not -- which counterparty is prone to more litigation, which is not. So that is one aspect of it. When we consider interim, basically, generally speaking, all the contracts are competitive bidding basis. So we factor in those parameters and then we try to cope. But once we are into a contract, then it is out of our end. Whatever assumptions we had made at the time of beginning of the contract, they have to be honored, whether or not that contract finally turns out to be good or finally does not turn out to be as good. But we have a robust risk assessment mechanism. So before bidding, we do assess the risk, we assess all the parameters, we assess financial viability. Sometimes it is also a call which is to be taken that some contract might not look as remunerative on the face of it as you would like it to be. But to create a market dominance also, sometimes you do get marketing calls. So this is, I would say, a multidimensional issue and every contract in itself is considered by the management prudently.

Okay. Sir, just coming back to this provision, sir, I'm just trying to understand, like we've come across this INR 17.4 crores as a provision that we needed to take. So one is that how are we pricing such events into our spreads, into the amount that we charge to our customers. So how are we seeing to it that such events do not help us earn a respectable ROCE on our business?

These are the actually risk of being in this business. You see the contract is for 15 years, 25 years and so. And when we frame the contract, law was entirely different. Now how the law has evolved over a period of time is for everyone to see. Every we see a plethora. And obviously, some situations do create distress, just like cancellation of the coal auction blocks, which created distress. Many generators who were supposed to supply timely electricity to our counterparties were unable to honor those commitments. So these kind of events do happen. And this is, I mean, inherent nature of this business. We try to, I mean, resolve in as amicable manner as possible. It is not that we have made a provision today, so we are not after the counterparty to recover this money. But litigation do take time. So as a prudent accounting policy, of course, we have taken a provision, but it is not like this we are leaving this money. We shall be pursuing our legal records. But to answer your question, this is really, I mean, so difficult to price and so difficult to predict.