CLSA has maintained its high conviction outperform call on Power Finance Corporation Ltd (PFC) while trimming the target price to ₹495 per share, implying an upside potential of around 31.7% from the current market price of ₹375.90.
The brokerage said PFC’s second-quarter performance was below expectations, with net interest income (NII) 3% lower than estimates, and a larger miss on PPoP and PAT due to foreign exchange losses on foreign currency borrowings. Loan growth also moderated to 14% year-on-year, compared to 16% in Q1, led by slower momentum in the power segment, which grew in low double digits.
CLSA highlighted that infrastructure lending growth remained strong, albeit on a low base, and that the company’s net interest margin (NIM) fell by 20 bps owing to lower loan yields. Despite these headwinds, asset quality stayed largely stable with gross NPL at 1.9% and net NPL at 0.4%, reflecting continued balance-sheet strength.
The brokerage said while near-term earnings may stay under pressure due to forex losses, PFC’s stable asset quality and solid capitalization underpin its long-term investment case.
Disclaimer: The above article is based on brokerage reports and is for informational purposes only. It does not constitute investment advice or recommendations to buy or sell any securities.
