Power Finance Corporation Ltd (PFC): India’s Power-Backbone NBFC
Power Finance Corporation Ltd (PFC) is a Maharatna-grade NBFC under the Ministry of Power, established in 1986 to support India’s power sector. Listed on NSE (PFC) and BSE (532810), it provides funding across power generation, transmission, and renewable energy projects.
📊 Q4 FY25 & FY25 Financial Highlights
- Q4 FY25 Total Income: ₹29,285 cr (+21% YoY); Operating Income: ₹27,536 cr (+11.9% YoY); PAT: ₹8,358 cr (+10.6% YoY).
- FY25 Consolidated PAT: ₹30,514 cr (+15% YoY); Standalone PAT: ₹17,352 cr (+21% YoY).
- Net Interest Income (NII): surged ~38–41% YoY to ~₹12,000–12,700 cr for Q4.
- Asset Quality: Gross NPA down to ~1.64–1.94%, Net NPA to ~0.38–0.39%, supported by successful recovery from KSK Mahanadi.
- Balance Sheet Growth: Loan book grew ~12–13% to ₹5.44–5.53 lakh cr; renewable energy exposure now ₹81,000 cr (+35% YoY).
- Dividend: Final ₹2.05 + interim ₹13.75 = ₹15.80/share for FY25.
💹 Share & Market Overview
- Current price (Jul 7, 2025): ~₹411–417, up ~1–3% post earnings and central bank norms; 52-week range: ₹357–580.
- Broker View: Bernstein (‘Outperform’, TP ₹525), Macquarie reaffirmed ‘Outperform’ citing structural growth; Motilal Oswal recommends ‘Buy’ at ₹485.
- Returns: YTD down ~7%, but +213% over 2 years and +556% over 5 years.
⚙️ Strengths & Risks
| Strengths | Risks |
|---|---|
| Market leader in power & renewable financing, backed by government | Sensitive to interest and credit cost changes |
| Robust asset growth with improving credit quality (NPA <2%) | Loan book slowdown or economic slowdown could strain growth |
| Diversified funding: domestic bonds, green bonds, international ECBs | Valuation seen as stretched; P/E ~6×, P/B ~2.7× but cyclical risks remain |
| Strong dividend payout; consistent profitability | Exposure to stressed power-discoms and renewable project risks |
🧭 Outlook & Catalysts
- Loan guidance: 10–11% growth targeted in FY26.
- Clean energy push: ₹81,000 cr renewable book and growing green financing.
- Macro tailwinds: Govt infrastructure spending, RBI’s project-finance norms (June 2025) ✅ boost financing ease.
- Upcoming triggers: Earnings updates, RBI rate decisions, asset-quality commentary, and bond markets condition.
✅ Conclusion
PFC remains central to India’s power-sector financing ecosystem. With strong earnings, clean-energy lending, improved asset quality, and attractive dividends, its fundamentals are solid. With decent upside from current levels (analyst TPs ₹485–525), it’s a core long-term candidate—though valuation and macro uncertainties warrant tactical caution.
