Power Finance Corporation Ltd Q2FY26 – ₹28,890 Cr Revenue, ₹7,834 Cr PAT, 4.16% Dividend Yield, and 7.88x Debt-to-Equity — The Maharatna with Monster Loans and Micro NPAs
Power Finance Corporation Ltd (PFC) isn’t your typical NBFC. It’s the Indian government’s ₹12-lakh-crore energy ATM — a Maharatna that lends to power projects the way your local cousin lends excuses. With a market cap of ₹1.25 lakh crore, the stock trades at a humble P/E of 5.07 and a price-to-book ratio of 0.99 — almost like the market still thinks it’s 2008.
The Q2FY26 consolidated revenue stood at ₹28,890 crore, up 12.3% YoY, while PAT clocked ₹7,834 crore, an 8.3% rise YoY. EPS for the quarter: ₹17.4 — meaning annualised EPS of ₹69.6, making the stock’s P/E even cheaper than an Ola Prime ride at 3 AM. The company’s ROE stands tall at 21%, ROCE at 9.73%, and dividend yield at a juicy 4.16% — yes, this PSU actually pays you to wait.
Yet, it’s not all fireworks — debt of ₹10 lakh crore and an interest coverage ratio of just 1.62 make it clear: PFC plays in the big leagues of leverage. But when you’ve got the Government of India holding 56%, that’s not debt, it’s “sovereign seasoning.”
2. Introduction – When Power Meets Finance, Sparks Fly
Once upon a time, in the bureaucratic wilderness of Delhi, someone decided India’s power crisis needed a financer, not a therapist. Enter Power Finance Corporation (PFC) — the government’s chosen lender to everything that hums, spins, or transmits electrons.
With every megawatt India dreams of adding, PFC writes the cheque. It’s the unseen current behind the grids, the lender behind the lights. From thermal monsters (39%) to green dreamers (12%), from transmission lines (47%) to miscellaneous power experiments (2%), PFC’s loan book reads like the electrical map of India.
Despite being a PSU, PFC isn’t your average slow-moving babu-run relic. It’s a Maharatna, crowned in October 2021, meaning it can raise funds, form JVs, and move cash faster than most ministries can find their login passwords. With ₹9 lakh crore of consolidated loan assets and net NPAs below 1%, the company’s balance sheet is stronger than most private banks’ mission statements.
And let’s not ignore the ₹3.65 interim dividend announced in November 2025, proof that even PSUs sometimes surprise you with more than just press releases.
3. Business Model – WTF Do They Even Do?
PFC’s business is simple in theory and massive in scale: lend money to power projects across India, both public and private. Think of it as the RBI of electricity — but with higher interest rates and better dividends.
Here’s how the model flows:
Fund-Based Products: Long-term project loans, lease finance for equipment, working capital loans, debt refinancing — basically, all forms of structured lending to keep turbines turning.
Non-Fund-Based Products: Guarantees, Letters of Comfort, and Credit Enhancements — i.e., ways to say, “We’ll back you, but don’t mess up.”
But wait, there’s more drama:
Around 82% of loans go to government sector projects, because if you’re going to lend ₹9 lakh crore, you’d better lend it to someone who can print more.
Stage III assets worth ₹16,497 crore are under resolution — half in NCLT, half outside — proving that even in the power sector, current doesn’t always flow smoothly.
If you’re wondering why this giant survives while smaller NBFCs faint at 7x leverage — remember, PFC is the lender to REC (which it owns 52.63%), making it a power-financing inception: an NBFC lending to another NBFC that lends to discoms that never pay on time.
4. Financials Overview
Metric
Latest Qtr (Sep’25)
YoY Qtr (Sep’24)
Prev Qtr (Jun’25)
YoY %
QoQ %
Revenue (₹ Cr)
28,890
25,722
28,539
12.3%
1.2%
Financing Profit (₹ Cr)
10,062
9,348
11,123
7.6%
-9.5%
PAT (₹ Cr)
7,834
7,215
8,981
8.3%
-12.8%
EPS (₹)
17.4
16.1
20.8
8.1%
-16.3%
Commentary: Even in a quarter when India’s grid tripped a few times, PFC didn’t. Revenue grew steadily, margins stayed above 35%, and NPAs kept declining — Gross NPA at just 1.47% and Net NPA at 0.31%, the kind of numbers private banks would sell their coffee machines for.
5. Valuation Discussion – Fair Value Range Only
Let’s decode the valuation drama:
A) P/E Method:
Annualised EPS: ₹69.6
Industry P/E (Financial Institutions): 23.2
Current P/E: 5.07
If the market valued PFC even at a modest 8x earnings, fair value = ₹69.6 × 8 = ₹557. At a conservative 6x, = ₹418. → Fair Value Range (P/E Method): ₹418 – ₹557.
