ICICI Securities's research report on Power Finance Corporation
Power Finance Corporation (PFC) reported better-than-expected PAT at INR 51.1bn, up 21% YoY/down 12% QoQ, aided by negative credit cost. After a robust 8% QoQ uptick in Q4FY25, its loan book was up 1% QoQ in Q1FY26, which seems to be healthy considering the seasonality and high base. Share of private sector in the overall book stands at 23% vs. 19% YoY. Private sector book’s three-year CAGR is ~30% vs. a 14% CAGR for the overall book. Hence, given the relatively faster growth in the private sector book, we model a relatively higher credit cost of 15–30bps in FY26E/FY27E vs. ~10bps in FY25. In spite of that, we expect PFC to report RoE of 16–18% for FY26E/FY27E. We, therefore,
Outlook
maintain BUY with an unchanged SoTP-based TP of INR 510, valuing PFC standalone at 1.3x FY26E BV (unchanged; adjusted for REC stake purchase) and applying a 25% holdco discount for the REC stake.
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