Tolling business boosts PTC India

After five consecutive quarters of revenue decline, PTC India Ltd reported a 16.9% growth in revenue, but there are questions about its sustainability as tolling projects get delayed and state electricity boards (SEBs) take time in clearing dues.

A new tolling project—where the company supplies the coal and sells the power produced—helped it arrest the fall in revenue in September. PTC India sold 8.9% more electricity in the September quarter from a year earlier. It was mainly because a new unit of the Simhapuri factory in Andhra Pradesh was commissioned under a tolling agreement and boosted volume by almost 300 million units.

Even though average margins for the trading business remained flat at around 4 paise per unit, thanks to the high-margin tolling business, where yields are around 80 paise per unit, PTC India was able to report a 29.7% jump in operating profit.

The stock has been underperforming the broader markets for some time now. For the stock to gain momentum, the company has to witness a structural improvement in receivables and volumes. Despite the talk of reforms, SEBs are excruciatingly slow in cleaning their books. This snail’s pace restructuring continues to weigh on intermediaries like PTC India. Trade receivables increased 20.5% over the past three months to Rs.3,109 crore.

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