PFC - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.4

📊 Fundamental Analysis

Power Finance Corporation (PFC) is a government-backed NBFC specializing in power sector financing. It offers a compelling long-term investment case based on

Metric Value Interpretation

ROE 21.0% Excellent shareholder return

ROCE 9.73% Decent for a lending institution

PEG Ratio 0.33 Undervalued relative to growth

P/E Ratio 5.89 Deep value compared to industry PE of 24.6

Dividend Yield 3.85% Attractive yield with consistent payouts

Debt-to-Equity 8.25 High, but typical for NBFCs with sovereign backing

EPS ₹69.7 Strong earnings base

📈 Technical & Valuation Insights

Current Price: ₹411

52W High/Low: ₹566 / ₹357

DMA 50 / DMA 200: ₹416 / ₹423 — trading below both, indicating short-term weakness

RSI (44.6): Neutral zone, not oversold

MACD (-0.71): Slightly bearish

Volume: Above average, showing accumulation

🎯 Ideal Entry Price Zone

Given the valuation and technical setup, ideal entry zones are

₹385–₹405: Near 200 DMA and support levels

₹360–₹375: Deep value zone if broader market corrects

These zones offer a favorable risk-reward setup for long-term investors.

🧭 Exit Strategy / Holding Period

If you already hold PFC

Holding Period: 3–7 years to benefit from India’s power infrastructure expansion and renewable energy financing

Exit Strategy

Partial Exit: Near ₹525–₹566 if price rallies to 52W high or analyst targets

Full Exit: If ROE drops below 15% or dividend payout weakens significantly

Trailing Stop-Loss: ₹375 to protect downside

🚀 Long-Term Growth Catalysts

Government Backing: Maharatna CPSE with strong policy support

Renewable Energy Push: ₹81,000 Cr+ renewable portfolio, growing 35% YoY

Asset Quality: Net NPA down to 0.39%, showing strong credit discipline

Dividend Consistency: Regular payouts with ~22% payout ratio

Undervaluation: PEG of 0.33 and P/E of 5.89 make it a value pick

⚠️ Risks to Monitor

High Leverage: Debt-to-equity of 8.25 requires close monitoring

Sectoral Challenges: Land acquisition delays and power purchase agreement issues

Loan Growth Moderation: Guidance trimmed to 10–11% due to sector headwinds

Would you like a side-by-side comparison with REC Ltd or other PSU financials to see how PFC stacks up?

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