Motilal Oswal Financial Services (MOSL) has reiterated a ‘Buy’ rating on Power Finance Corporation (PFC), maintaining its target price at ₹490, suggesting an upside of nearly 18% from current levels.
Earnings in line; asset quality stable
The brokerage stated that PFC’s Q1 performance was broadly in line with estimates, supported by provision write-backs, while asset quality remained stable. Although the net interest income (NII) beat expectations, it was partially offset by higher forex losses. The loan book also grew by ~1% sequentially.
FY26 growth outlook reaffirmed
PFC has reaffirmed its loan growth guidance of 10–11% for FY26. MOSL forecasts 10%/12%/8% CAGR in disbursements, advances, and PAT respectively over FY25–27.
Strong return profile and attractive valuation
MOSL expects a healthy Return on Assets (RoA) of 3% and Return on Equity (RoE) of 18% by FY27, coupled with a dividend yield of ~4.4%. The stock remains attractively valued, trading at just 0.9x FY27E price-to-book value and ~5x FY27E price-to-earnings, making it one of the more reasonably priced plays in the sector.
Disclaimer: The views expressed in this article are those of the brokerage firm and do not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
