Buy Power Finance Corporation, target price Rs 560: Motilal Oswal Financial Services

by PratapDarpan
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Motilal Oswal Financial Services on Power Finance Corporation Rs. A buy call has been made with a target price of 560. The current market price of PFC is Rs. is 467.45. Power Finance Corporation, established in 1986, raised Rs. is a large cap company with a market cap of 153289.73 Crore, operating in Term Lending Institutions sector.

PFC’s major products/revenue segments include interest, dividend and fee and commission income for the year ending 31-Mar-2023.

Financial
For the quarter ended 30-06-2024, the company reported Rs. 24736.68 crores reported a consolidated total revenue, compared to the last quarter’s total revenue of Rs. 24176.34 crores up by 2.32% and 17.79% higher than the total revenue of Rs.241 crores in the same quarter last year. . The company reported a net profit after tax of Rs 7182.06 crore in the latest quarter.

Investment rationale

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    Power Finance Corporation (Standalone) trades at 1x FY26E P/BV and 5x FY26 P/E and Motilal Oswal Financial Services believes the risk-reward is attractive given good visibility on loan growth, earnings growth, stressed asset resolution and healthy returns. is The ratio brokerage maintained its BUY rating with a SoTP (Sep?26E)-based target price of Rs. 560 (PFC reiterates based on 1.2x target multiple for standalone business and Rs 211/ share for PFC’s stake in REC? A discount of 20%).

    Key Risks: 1) Increased exposure to private infrastructure projects as these loans fall outside PFC’s core expertise of financing power projects; 2) Increased exposure to power projects without PPA, 3) Compression of spreads and margins due to aggressive competitive landscape.

    Promoter/FII Holdings
    Promoters held 55.99 per cent stake in the company as on 30-Sep-2024, while FIIs held 17.74 per cent, DIIs 17.35 per cent.

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