At Rs 98, PTC is a ‘buy’ for the medium term

At Rs 98, PTC is a ‘buy’ for the medium term

By Rajiv Kapoor | 10 June, 2017

PTC India Ltd, formerly Power Trading Corporation of India Ltd, is the pioneer in starting the power trading market in India. It has been mandated by Government of India to trade in electricity with neighbouring countries like Bhutan, Nepal and Bangladesh. The activities undertaken by PTC include 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 various regions of the country. The company is credited with a number of products in the electricity trading market to meet the divergent needs of the customers and is a unique example of a successful public-private partnership. Major public sector undertakings of the Ministry of Power along with Government of India as promoter, the ownership interest is widely held among the public. Power is one of the most critical components of infrastructure and crucial for the economic growth of any nation. The existence and development of adequate infrastructure is essential for sustained growth of the Indian economy. India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources, such as wind, solar, and agricultural and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand, a massive addition to the installed generating capacity is required. Government of India’s focus on attaining “power for all” has accelerated capacity addition in the country. The PTC stock, currently quoting at Rs 98, is a buy for medium term, with a 20% price appreciation in the works.

It turned out to be a lethargic performance from Indian benchmark indices this week, as they settled in a narrow range. Sentiment remained subdued after Reserve Bank of India (RBI) raised concerns over the possibility of fiscal slippages due to farm loan waivers and also cut the economic growth projection to 7.3% for the current fiscal from 7.4% earlier. The Central bank, however, used a less hawkish tone and reduced the Statutory Liquidity Ratio (SLR) in its second bi-monthly monetary policy for financial year 2017-18.

Traders turned anxious after the Chief Economic Adviser expressed his unhappiness with the Reserve Bank’s inflexibility on interest rates and warned that real policy rates were becoming tighter and rising at a time of low inflation and slowing growth. However, losses remained capped with UNCTAD’s latest report that India would be the top prospective foreign direct investment (FDI) destination globally, after the US and China. Back home, many liquor stocks gained traction after the Karnataka government decided to send a proposal to the Union government seeking to de-notify the national highways passing through urban local bodies in the state as local roads. Likewise, shares of steel companies traded higher in an otherwise subdued market, on the expectations of a revival in consumption during the current financial year of 2017-18. The market breadth remained pessimistic, as there were 1,328 shares on the gaining side, against 1,351 shares on the losing side, while 177 shares remained unchanged. Traders expect the market to move in a narrow range for most part of next week.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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