PTC Industries freezes at 10% lower circuit post Q3 results

With today's 10% decline at Rs 11,789.05 on the BSE, the stock price of PTCIL corrected 34% from its 52-week high level of Rs 17,978 touched on January 9, 2025.

Shares of PTC Industries (PTCIL) were locked at the 10 per cent in lower circuit at Rs 11,789.05 on the BSE in Monday’s intra-day trade after the company reported 76 per cent year-on-year (YoY) growth in consolidated net profit at Rs 14.24 crore in December 2024 quarter (Q3FY25), mainly due to higher other income. However, on sequential basis, profit was down 18 per cent from Rs 17.39 crore in Q2FY25.

 

The company’s revenue from operations grew 20.6 per cent YoY at Rs 66.92 crore; and other income more-than-doubled to Rs 10.19 crore from Rs 3.61 crore in Q3FY24.

 

With today’s decline, the stock price of PTCIL corrected 34 per cent from its 52-week high level of Rs 17,978 touched on January 9, 2025.

 

 

In the previous two calendar years, PTCIL zoomed over 100 per cent. In calendar year 2024, the stock surged 123 per cent, while, in calendar year 2023, it soared 137 per cent.

 

PTCIL is one of the leading manufacturers in the engineering sector catering to the aerospace, defence, oil and gas, power and marine industries. It offers castings and comprehensive design support for varied range products of critical and super-critical applications including castings for pumps and valves, marine applications (like pump casings/chambers) and parts for water jet engines (such as guide vane chambers, impellers, fixed pitch propellers, propeller blades, hubs, etc., and flow control castings). 

 

The company caters to varied industries like aerospace, LNG processing, oil and gas, marine, energy, food processing and pulp and paper requiring castings of stainless steel, duplex, super duplex stainless steel, NAB, titanium, etc.

 

Being present in a niche segment with a relatively lower competition on account of the high technology barriers, PTCIL has been able to develop strong associations with reputed Government and private companies that include customers like Rolls Royce Marine, Dassault Aviation, Hindustan Aeronautics Limited (HAL), Ministry of Defence (MoD) and Israel Aerospace Industries. This has led to repeat business for the company over the years, supporting its revenue growth.

 

However, given that PTCIL’s raw materials costs are essentially driven by commodity prices, its profitability also remains exposed to the volatility in the prices of its raw material. However, the risk is mitigated to an extent with the company following a dynamic pricing strategy to address fluctuations in raw material costs, according to domestic rating agency ICRA.

 

The company has a planned project costing around Rs 700 crore, of which Rs 250 crore has already been incurred till September 2024. The remaining Rs. 450 crore is to be incurred over H2 FY2025 to FY2027. The project is expected to diversify PTCIL’s product profile by enhancing its capabilities with more focus on metals like titanium and nickel/cobalt superalloys while also increasing its presence in the domestic market, with a significant contribution from the defence sector, ICRA said in the rating rationale.

 

PTCIL’s business is working capital intensive on account of the requirement to maintain high inventory levels including for products under development considering the lead time for order fulfilment is higher. Further, large batch size and bunching up of orders in few quarters also increase the inventory and debtor levels during specific periods.

 

These factors have resulted in high working capital intensity with NWC/OI of 75.6 per cent and 60.4 per cent in FY2024 and FY2023, respectively. While the business is expected to remain working capital intensive in nature, comfort can be drawn from PTCIL’s adequate liquidity position and bank facilities to fund its working capital requirements, ICRA said.