Power Finance Corporation Ltd. share price target

We interacted with Power Finance Corporation (PFC) to understand the company’s revised growth outlook, evolving sector dynamics and asset quality trends.

Power Finance Corporation (PFC)’s 4QFY25 PAT grew ~24% YoY to INR51.1b (~17% beat). FY25 PAT jumped ~20% YoY to INR173.5b. The earnings beat was primarily driven by the write-back of ~INR12b in interest income from the resolution of KSK Mahanadi.

Power Finance Corporation (PFC)’s 3QFY25 PAT grew ~23% YoY to INR41.5b (in line). NII grew ~13% YoY to ~INR46.9b (in line). Other income grew ~2% YoY to~INR6b, which included dividend income of INR5.9b (PY: INR5b).

Power Finance Corporation (PFC)’s 2QFY25 PAT grew ~14% YoY to INR43.7b. Its 1HFY25 PAT grew 18% YoY to INR80.9b and we expect the 2HFY25 PAT to increase ~14% YoY.

Power Finance Corporation’s (PFC) Q4FY23 PAT was healthy at Rs34.9bn, up 16% QoQ and 34% YoY, largely driven by credit cost reversal of Rs4.9bn. CRAR sustained above 24% and PFC announced final dividend of Rs4.5/share, taking the total dividend for FY23 to Rs13.25, which translates into ~30% dividend payout ratio.

Power Finance Corporation’s (PFC) Q3FY23 earnings surpassed I-Sec estimates – buoyed by provisioning write-back of Rs1.3bn. Flow of resolutions led to 54bps QoQ and 115bps YoY decline in stage-3 pool to 4.21%, while adequate provisioning towards the same also led to 12bps QoQ and 81bps YoY decline in net stage-3 to 1.19%.

Power Finance Corporation’s (PFC) Q2FY23 earnings surpassed I-Sec estimates buoyed by provisioning release of Rs16bn on stress resolution and dividend income of Rs5.11bn.

Power Finance Corporation’s (PFC) Q1FY23 earnings, as anticipated, registered a decline of 7% QoQ / 19% YoY to Rs21.1bn.

Power Finance Corporation Ltd. (PFC) was incorporated in 1986 - a Schedule-A Navratna CPSE (Central Public Sector Enterprises) and is a leading Non-Banking Financial Corporation in the Country. It is a specialized public financial institution in power sector and is the largest infrastructure finance company in the country by net worth. It is incorporated to finance, facilitate, invest and promote India's integrated development of the power and associated sectors. PFC's product portfolio comprises of financial products and services mainly to power projects like project term loans, short term loans, equipment lease financing, discounting of bills and consultancy services. It has also initiated financing of projects based on renewable energy...

Power Finance Corporation Ltd Q2FY19 results Comment Operating Income grew by 6.3% to Rs. 7407.08 Cr in Q2FY19 when compared to the previous quarter. Also, it rose by 8.16% when compared with Q2FY18.

owing to decline in NIM to 3.4% by FY20E from 4.1% in FY17. We expect Gross/Net NPA ratios to increase further to 6.4%/4.8% by FY19E due to withdrawal of various forbearances by the RBI. While uncertainty around the asset quality and credit cost continue to hamper the stock price, high dividend yield (~9.0%) will limit further downside in the stock. Hence, we upgrade rating to BUY with a downward TP of Rs97 (P/ABV of 0.8x for FY20E). Distribution segment drive growth in the loan book...

owing to decline in NIM to 3.4% by FY20E from 4.1% in FY17. We expect Gross/Net NPA ratios to increase further to 6.4%/4.8% by FY19E due to withdrawal of various forbearances by the RBI. While uncertainty around the asset quality and credit cost continue to hamper the stock price, high dividend yield (~9.0%) will limit further downside in the stock. Hence, we upgrade rating to BUY with a downward TP of Rs97 (P/ABV of 0.8x for FY20E). Distribution segment drive growth in the loan book...

PFC reported a disappointing P&L; performance with Q3 PAT at Rs 16 bn (down 17.7% YoY; our est. Rs 18.6 bn), primarily led by sharp decline in NIM (down 35 bps QoQ at 3.85%).

Power Finance Corporation Ltd Q3FY18 results comment Operating Income fell by 11.16% to Rs. 6127.46 Cr in Q3FY18 when compared to the previous quarter. Also, it decreased by 10.25% when compared with Q3FY17.

The interest income of the company was Rs. 6,984 crore in the Q2FY18, slightly up from Rs. 6,968 crore year ago. The company has made a provision of Rs. 1,089.86 crore for nonperforming assets (NPAs or bad loans) in the Q2FY18, which is higher than Rs. 313.36 crore year ago. The company's gross NPAs as on 30 September 2017 stood at Rs. 21,504.44 crore, down from Rs. 30,718.61 crore on 31 March 2017. Its loan book as on FY17 includes sanction of Rs. 1,00,603 crore with disbursement amount of Rs. 62,798 crore. Of total loans ~72% of advances belong to state power utilities, 9% to central power utilities, 14% to private power utilities and 5% to joint...

PFC reported a PAT of Rs 14.3 bn (down 17% YoY) dragged by higher provisions (up 137% YoY) and lower NII (down 7% YoY). Headline asset quality was largely stable with GNPA ratio at 12.5% (down 4 bps QoQ) with ~18% coverage ratio.

Power Finance Corporation Ltd Q1FY18 results comment Operating Income grew by 22.96% to Rs. 6779.82 Cr in Q1FY18 when compared to the previous quarter

PFC posted a loss of Rs 34 bn in Q4FY17 on surge in provisions. Provisions rose, as PFC migrated from MoP/GoI approved prudential norms to RBI prudential norms in Q4.

Operating Income decreased by 19.24% to Rs. 5513.77 Cr in Q4FY17 when compared to the previous quarter.

Q3FY17 PAT at Rs 19.5 bn (up 23.3% YoY) was higher than our estimate primarily due to lower provisions (down 75% YoY on favourable base) and higher translation/actual exchange gain on forex borrowings. Asset quality improved with absolute GNPAs down by ~4% QoQ and GNPA ratio down by 14 bps QoQ at...