Buy PFC, REC, says PN Vijay

Buy Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), says PN Vijay, Portfolio Manager.

Vijay told CNBC-TV18, "PFC and REC are very strange companies. They have two points going against them. One is the speed of the restructuring of the electricity boards which has a telling effect on both these companies. Second that they are clubbed generally with the midcap sector which means that when midcap bashing goes on as it has been going on, they also are fairly prominent midcaps getting hit. The second is of course a generic phenomenon and one just has to see when the value investing comes back."
He further added, "If people become stock specific, I think PFC and REC are good candidates, their NPA levels are not that significant and they have escrowing of most of their receivable from state governments and so on. They are not bad companies and be worth a good buy."
"Punjab state electricity board, their outstanding have all escrowed and it is just a little bit of politics that’s going on which is normal. So I don’t see any great headwinds to these companies but here again I feel that the sentiment has to change for these companies for example REC hit Rs 260 plus and then came all the way down. So there has to be sentiment sort of a move towards midcap buying and then these two again will pick up. They are good companies, they have nothing fundamentally wrong in their balance sheets but they are I think suffering from little bit of bad news and the general aversion to midcaps."