Power Finance Corporation Ltd Fundamental Analysis

Power Finance Corporation Ltd’s fundamental analysis highlights key financial metrics, including a market capitalization of ₹1,70,615 crore, a PE ratio of 22, a debt-to-equity ratio of 8.52 and a return on equity (ROE) of 21.3%. These figures indicate the bank’s financial health and its ability to manage debt while delivering returns.

Power Finance Corporation Ltd Overview

Power Finance Corporation Ltd (PFC), established in 1986, is a leading public sector financial institution in India. It finances and supports the development of power sector projects and is recognized as a Navratna and Infrastructure Finance Company.

The company has a market capitalization of ₹1,70,615 crore and is listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Currently, the stock is trading 10.9% below its 52-week high and 158% above its 52-week low.

Power Finance Corporation Financial Results

Power Finance Corporation Ltd’s financial results for FY24 show a total income of ₹91,175 crore and a net profit of ₹26,267 crore, up from ₹76,345 crore and ₹20,221 crore in FY22. The PPOP margin decreased to 34.93% from 40.02% in FY22.

1. Revenue Trend: Power Finance Corporation’s total income rose to ₹91,175 crore in FY24 from ₹77,625 crore in FY23 and ₹76,345 crore in FY22, reflecting strong revenue growth.
2. Equity and Liabilities: Equity capital stood at ₹3,300 Crores in FY24, with reserves increasing to ₹75,903 Crores. Total liabilities increased to ₹5,05,583 Crores from ₹444,833 Crores in FY23, indicating a growing financial base.
3. Profitability: Pre-Provisioning Operating Profit (PPOP) for FY24 was ₹31,843 crore, up from ₹29,418 crore in FY23 but down from ₹30,552 crore in FY22, indicating fluctuating profitability.
4. Earnings Per Share (EPS): EPS slightly decreased to ₹59.88 in FY24 from ₹60.19 in FY23 but improved from ₹53.08 in FY22, showing modest earnings per share growth over the years.
5. Return on Net Worth (RoNW): The Return on Net Worth (RoNW) slightly decreased to 19.5% in FY24 from 20% in FY23, suggesting a modest decline in returns on shareholders’ equity.
6. Financial Position: The dividend payout ratio was 22.55% in FY24, up slightly from 22.01% in FY23 but down from 22.61% in FY22, indicating a stable dividend policy.

Power Finance Corporation Financial Analysis

All values in ₹ Crores.

Power Finance Corporation Company Metrics

Power Finance Corporation Ltd has a market cap of ₹1,70,615 Cr and trades at ₹517. With a P/E ratio of 8.22, ROE of 21.3%, and a net profit of ₹27,661 Cr, it shows strong performance.

1. Market Cap: Power Finance Corporation Ltd’s market cap stands at ₹1,70,615 Cr, reflecting its significant size and market presence.
2. Book Value: The book value of Power Finance Corporation Ltd is ₹306, indicating the per-share value of the company’s net assets.
3. Face Value: The face value of Power Finance Corporation Ltd’s shares is ₹10. This is the nominal value assigned to each share, providing a baseline for financial calculations and valuations.
4. Turnover: The company’s asset turnover ratio is 0.09, showing the efficiency with which assets generate revenue. A lower ratio indicates lower asset efficiency in generating sales.
5. PE Ratio: With a Price-to-earnings (P/E) ratio of 8.22, Power Finance Corporation Ltd is valued relatively attractively compared to its earnings.
6. Debt: Power Finance Corporation Ltd has a substantial debt of ₹8,61,961 Cr. While high debt can indicate significant leverage, it also requires careful management to ensure financial stability.
7. ROE: The Return on Equity (ROE) for Power Finance Corporation Ltd is 21.3%, demonstrating effective management and profitability relative to shareholders’ equity.
8. EBITDA Margin: Power Finance Corporation Ltd’s EBITDA margin is 10.8%, reflecting the company’s efficiency in generating earnings before interest, taxes, depreciation, and amortization.
9. Dividend Yield: The dividend yield for Power Finance Corporation Ltd is 2.61%.

Power Finance Corporation Stock Performance

The table shows impressive returns on investment, with 45% over 5 years, 74% over 3 years, and 136% over 1 year, indicating strong short-term gains compared to longer-term performance.

Examples:

1. A invested ₹100,000, received ₹136,000 return in 1 year resulting in a total amount of ₹2,36,000.

2. A invested ₹100,000, received a total of ₹174,000 return after 3 years.

3. A invested ₹100,000, received a total of ₹145,000 return after 5 years.

Power Finance Corporation Peer Comparison

Power Finance Corporation Ltd, with a market cap of ₹1,70,615 crore, shows a PEG ratio of 0.56 and a 1-year return of 135.8%. Compared to competitors like REC Ltd, IRFC, and Indian Renewable, it demonstrates solid financial stability and growth potential.

Power Finance Corporation Shareholding Pattern

The shareholding Pattern of Power Finance Corporation Ltd reveals that promoters hold a consistent 55.99% stake. Foreign Institutional Investors (FIIs) have increased their share to 17.93%, while Domestic Institutional Investors (DIIs) hold 17.08%, and retail & others account for 9%.

All values in %

Power Finance Corporation Ltd History

Power Finance Corporation Ltd was incorporated on July 16, 1986, under the Companies Act. It received its commencement certificate on December 31, 1987, focusing on financing India’s power sector development.

By August 31, 1990, it was recognized as a public financial institution. In 2007, it was declared a Navratna company, granting it significant operational and financial autonomy.

The company transitioned to an Infrastructure Finance Company (IFC) in 2010, enhancing its capacity to raise funds efficiently. It also received ISO 9001 certification for quality management.

In 2008, Power Finance Corporation was involved in major power projects and launched the R-APDRP program. It also established PFC Consulting Limited for consultancy services.

Recent milestones include issuing bonus shares in 2023 and receiving various awards, such as the ICAI Award for Excellence in Financial Reporting.

How To Invest In Power Finance Corporation Ltd Share?

Investing in Power Finance Corporation shares is a straightforward process:

• Open a Demat Account: Start by opening a Demat and trading account with a reliable brokerage firm like Alice Blue.
• Complete KYC: Submit necessary documents for KYC verification.
• Fund Your Account: Deposit funds into your trading account.
• Buy Shares: Search for Power Finance Corporation shares and place your buy order.

Power Finance Corporation Ltd Fundamental Analysis – FAQs

Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.