PTC India : Q3 FY23 Earnings Conference Call

PTC India Limited

February 15, 2023

Moderator:Ladies and gentlemen, good day and welcome to the Investor Call of PTC India Limited Q3 FY23 Earnings Conference Call.

The Management Team of PTC India is led by Dr. Rajib Kumar Mishra - CMD, PTC. Dr. Mishra is accompanied by Mr. Harish Saran - Executive Director, PTC; Mr. Pankaj Goel - CFO, PTC and Mr. Sushant Chaturvedi - Head - PO and IR at PTC India. At this moment, all participants are in the listen only mode.

Later, we will conduct a question-and-answer session. At that time, you may click on the Q&A tab on the left-hand side of your panel to ask a live question. Please note that this conference is being recorded.

I now hand the conference over to Dr. Rajib Kumar Mishra - CMD, PTC India to make an opening statement. Thank you and over to you, sir.

Rajib Kumar Mishra: Thank you, Tanvi. Good afternoon friends and welcome to the earnings call for quarter 3 of the financial year 2023. The Earnings Presentation as you all know was uploaded on the stock exchanges. Hope you all had a chance to have a quick glance of the same. I will now take you through the key highlights for the quarter in the next 10 to 15 minutes and then we will go for the question-and-answer session, but before that I would like to give you the glimpse of the larger ecosystem on which we are operating.

The sector in the last 9 months and particularly in the last 3 months which we will be discussing today have seen an economic recovery and there was the geopolitical conflict which is going on in the Western part of the world and that has impacted the commodity prices especially the fuel prices and the imported coal. The expected GDP growth would continue to be more than 6% for the Indian economy and so will be the requirement of power in near future. We are seeing the peak demand trends to be above during this period, during December 22 quarter, witnessed a peak demand of around 200 gigawatt in comparison to around 175 gigawatt in the previous year. This year, there is an official forecast of peak demand in the summer to the extent of 235 gigawatt which is much higher comparable to 200 gigawatt achieved last year. So, for anyone who is along the power sector for a seller perspective has huge tailwind and that we have seen in the last couple of months that the power prices in spite of winter months has gone up and on average in the exchanges it was as high as Rs. 6.88. And in many time blocks, it has touched Rs. 12 even during the winter months.

Now, I will briefly cover the performance of the company in the third quarter of FY23. You would have already noticed that the auditor qualifications present in the PTC India standalone Q2 FY23 have now been removed for the bilateral electricity trading segment which was impacted during H1 FY23 by heightened volatility in the short-term electricity prices, elevated fuel prices and a rapid increase in the peak demand still continues, however. I am pleased to say that on a consolidated basis, our net profit has increased to Rs. 104 crores which is 66% increase over the last quarter.

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PTC India Limited

February 15, 2023

On a standalone basis, our net profit for the third quarter has already or largely remained the same at Rs. 78 crores versus Rs. 79 crores last year. From the business strategy point of view, I would like to tell you that the company focused more on the core margin than on the volume as the prices remained high in the exchanges. The per unit core margin realized during quarter 3 improved to 3.09 paisa per unit compared to 2.51 paisa per unit in Q3 indicating a marked improvement in the operational efficiencies, tighter working capital management as well as the focused strategy to undertake the transactions.

Now, the total traded volume in Q3 was 15.5 billion units. This is primarily due to the seeding negative carry volumes on the power exchanges and other reasons. To explain it a little bit, the company has taken a conscious call that the trading margin has to be more than what is the cost to serve a customer and this has impacted some of the exchange volume which was a conscious call. Now, the core margins were up by 58 basis points to 3.09 which I had just mentioned and it has 23% increase compared to the last year.

One very important aspect which I would like to cover in my opening statement is there are two or three highlights which have not been covered in our presentation that the outstanding in some of the states have come down drastically for the company which is a positive impact for the risk mitigation part of it. One of the states, I would like to mention Jammu & Kashmir where in March 22, the outstanding was more than Rs. 1,800 crores has come down to a level of Rs. 564 crores which is a drastic reduction in our risk.

The second state which I would like to mention is Bihar where the outstanding was more than Rs. 800 crores in the month of March has come down to less than Rs. 400 crores. Overall, we have reduced almost less than Rs. 2,300 crores as the current outstanding from the 8 major states. So, this is a major achievement, of course this is with the help of Govt. of India (GOI) LPS Scheme which was introduced in the month of June has helped us to reduce it, but this is a major achievement by the company.

To take you to further details on the accounts and finances of the company in quarter 3, I would request Shri Pankaj Goel - CFO of the company to take you through the presentation or the oral presentation.

Pankaj Goel:Thank you CMD sir. Good evening everyone.

As already been stated, our presentation has already been uploaded on the website, but for this thing, I will go through the figures in a summarized form for the quarter ended and 9 month ended December 22. First, I will go through the standalone results for the quarter. The volume has decreased by 20% from 15.5 BU from 19.5 BU. The reasons have already been explained by the CMD sir. Total operational income has increased by 2% to Rs. 143 crores from Rs. 140 crores. Profit before tax had slightly decreased by 1% or remains flat I will say at Rs. 105 crores. Profit after tax has also remained flat and it is stated around Rs. 79 crores. Total other

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PTC India Limited

February 15, 2023

comprehensive income is also flat at Rs. 77 crores. Earnings per share stood at 2.63 as compared to 2.68 during the last Quarter.

Now, I will go through the 9-month figures. Volume has decreased by 23% to 54.2 BU from

70.2 BU. Total operational income has decreased by 14% to Rs. 401 crores from Rs. 466 crores. Profit before tax has decreased by 20% to Rs. 289 crores from Rs. 361 crores. Profit after tax has also decreased by the same 20% to Rs. 214 crores from Rs. 269 crores. Total other comprehensive income has decreased by 20% to Rs. 214 crores from Rs. 269 crores. Earnings per share stood at Rs. 7.24 in comparison to Rs. 9.08 in the last 9 months ended.

Now, I will go through the consolidated results for the quarter. So, volume has decreased by 20% to 15.6 BU from 19.5 BU. Profit before tax has increased by 68%, Rs. 142 crores from Rs. 84 crores. Profit after tax has also increased by 66%, Rs. 104 crores from Rs. 63 crores. Total other comprehensive income has also increased by 66% to Rs. 104 from Rs. 63 crores. Earnings per share for the quarter on a consolidated basis stood at Rs. 3.1 in comparison to Rs. 2.04 in the last quarter.

I will go through the 9 months ended on a consolidated basis. Volume has decreased by 23% to

54.6 BU from 70.6 BU. Profit before tax has decreased by 4% to Rs. 509 crores from Rs. 529 crores. Profit after tax is decreased by 4% to Rs. 378 crores from Rs. 395 crores. Total other comprehensive income has decreased by 6% to Rs. 378 crores from Rs. 404 crores. Earnings per share for 9 months ended on a consolidated basis stood at Rs.11.11 in comparison to Rs. 12.09 during the last 9 month ended December 22. Thank you, sir.

Rajib Kumar Mishra: So, with this, we have given you the presentation of the numbers by CFO and Tanvi, we can open the question-and-answer session for today.

Moderator:Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Anshuman Ashit from ICICI Securities. Please go ahead.

Anshuman Ashit:Sir, my question is on the statement that you had made regarding the conscious decision that you have taken regarding the margins, which has led to a decline in our volumes for the 9 months, sir, could you please explain it a bit further, is this for a particular segment and what are the threshold margins that we have considered while taking this decision?

Rajib Kumar Mishra: Anshuman, this is a business call which the company keeps on taking but let me tell you on an average price of Rs. 6.88 paisa which I mentioned in the exchanges, we have calculated what will be the cost to serve a customer with that kind of prices. Now, in such scenario, whatever trading margin we get from the clients to serve those clients is being considered on case-to-case basis which is done regularly, but during the last 9 months, we have seen the exchange prices abnormally high and in this segment only we had taken call that we will be conservative in some of the businesses where we are doing the trading and we are not getting the sufficient margin to cover the cost of services till the prices come to normal.

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