PFC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.3

📊 Core Financials Analysis

Profitability

ROE: 20.4% and ROCE: 9.74% — strong return on equity, typical for financial institutions; ROCE is modest due to capital intensity.

EPS: ₹55.0 — robust earnings per share, supporting valuation.

PAT Qtr: ₹4,502 Cr vs ₹5,109 Cr — slight sequential dip, but YoY growth of 21.1% is impressive.

Balance Sheet & Cash Flow

Debt-to-equity: 5.23 — high leverage, expected for NBFCs; manageable due to asset-backed lending.

Dividend Yield: 3.87% — attractive for income investors.

Strong cash flows backed by long-term infrastructure lending and sovereign guarantees.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 7.42 Deeply undervalued vs industry PE of 25.3

P/B Ratio ~1.48 Reasonable given strong ROE

PEG Ratio 0.37 Undervalued relative to growth

Intrinsic Value ₹1,120 (est.)

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Current price undervalued by ~64%

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🧠 Business Model & Competitive Edge

Company Profile: Power Finance Corporation Ltd (PFC) is India’s leading infrastructure finance company, primarily focused on power sector lending.

Strengths

Strategic role in financing India’s energy transition and grid expansion.

Backed by government ownership, ensuring policy alignment and credit stability.

Diversified loan book with long-term visibility and low default risk.

Challenges

High leverage and sector concentration.

Sensitive to regulatory changes and interest rate cycles.

📈 Technical & Sentiment Overview

RSI: 57.3 — neutral to mildly bullish.

MACD: -0.65 — flat momentum, possible consolidation.

DMA 50 & 200: Price hovering near both — trend indecisive.

Volume: Above average — active investor interest.

FII/DII Holding: Slight decline — sentiment cautious but not bearish.

💡 Entry Zone & Long-Term Guidance

Suggested Entry Range: ₹380–₹400 — near support and well below intrinsic value.

Holding Strategy

Ideal for long-term investors seeking high dividend yield and undervalued financials.

Price targets for 2025 range from ₹430 to ₹600

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; long-term targets for 2030 go up to ₹2,150

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Monitor asset quality, disbursement growth, and policy tailwinds.

PFC is a classic value play with strong fundamentals and a strategic role in India’s infrastructure growth. If you're building a portfolio of high-yield, low-valuation financials, this one deserves serious attention. Let me know if you'd like to compare it with REC or IRFC next.

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