1. At a Glance
PFC isn’t your neighborhood NBFC. It’s the muscle behind India’s entire power infrastructure — from term loans for hydro dams to helping build EV charging networks. A 21% ROE beast that trades at a P/E of 6.09. Yes, you read that right. High profit, low drama — unless you count PSU bureaucracy as drama.
2. Introduction with Hook
Imagine a loan shark that lends to governments, earns 10% on capital, and still trades like it’s hiding skeletons. Welcome to Power Finance Corporation.
- ₹1.17 lakh crore net assets
- Net Profit: ₹30,514 Cr in FY25
- ROE: 21%
- Stock P/E: 6.09
- Dividend Yield: 3.73%
And the market still acts like PFC sells candles on the side.
3. Business Model (WTF Do They Even Do?)
PFC is India’s official power sector sugar daddy.
- Fund-based lending: Long-term infra loans to power projects (GENCOs, TRANSCOs, DISCOMs)
- Non-Fund based: Guarantees, LoCs, lease finance for power equipment
- Clients: SEBs, NTPC, private infra players
- SPV Creation: Helps set up transmission projects (then transfers to PowerGrid or others)
Basically, if India builds anything with a turbine — PFC is writing the cheque.
4. Financials Overview
plaintextCopyEditFY25 Snapshot (₹ Cr)
Revenue : ₹1,06,502
Net Profit : ₹30,514
EPS : ₹69.67
ROE : 21.0%
Book Value : ₹357
Dividend Yield : 3.73%
Gross NPA : 1.64%
Net NPA : 0.38%
- This is PSU perfection: High EPS, low valuation, consistent cash flow.
- NPAs declining steadily = rare in PSU land.
5. Valuation
At CMP ₹424 — you’re buying one of India’s most profitable NBFCs at a discount store.
| Metric | Value |
|---|---|
| P/E | 6.09 |
| P/B | 1.19 |
| Dividend Yield | 3.73% |
| PEG (based on 5Y CAGR of 26%) | 0.23 |
EduFair Value Range:
- DCF/PEG blended: ₹525–₹650
- Dividend Discount Model (with 20% EPS growth): ₹500–₹575
🎯 Current Price = Cheap.
🧠 Fair Value = ₹500–₹650
6. What’s Cooking – News, Triggers, Drama
- Created new SPVs like Saswad Transmission Ltd, Wagdari, Kurnool-IV
- Transferred MEL Power Transmission to Power Grid in June 2025
- NPAs lowest in a decade (GNPA: 1.64%, NNPA: 0.38%)
- FY25 net profit grew 15% despite rising borrowing costs
- 5-year profit CAGR: 26%
- FIIs quietly increasing stake → Smart money sees it too
7. Balance Sheet
| Metric | Mar 2025 (₹ Cr) |
|---|---|
| Equity Capital | 3,300 |
| Reserves | 1,14,438 |
| Borrowings | 9,71,758 |
| Other Liabilities | 88,590 |
| Total Assets | 11,78,086 |
| Gross Loan Book | ~₹10.6 lakh Cr |
- Gearing: ~8.5x — totally normal for a infra-focused NBFC
- Low provisioning in FY25 → better asset quality
- CWIP negligible — this is a lender, not a builder
8. Cash Flow – Sab Number Game Hai
| Cash Flow Item | FY25 (₹ Cr) |
|---|---|
| Operating Cash Flow | -₹92,269 |
| Investing Cash Flow | -₹2,312 |
| Financing Cash Flow | ₹94,258 |
| Net Cash Flow | -₹323 |
Why negative OCF? Because lending ≠ operating expense. In NBFCs, cash flow lies more than Instagram filters.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 21% |
| ROA | 2.75% |
| NIM (Est.) | ~3.2% |
| Gross NPA | 1.64% |
| Net NPA | 0.38% |
| CRAR | ~24% |
| Dividend Payout | 23% |
PSU and sexy? In this rare case, yes.
NIM + Low GNPA + High ROE = textbook NBFC health.
10. P&L Breakdown – Show Me the Money
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS (₹) |
|---|---|---|---|
| FY23 | ₹77,807 | ₹21,179 | ₹48.15 |
| FY24 | ₹91,691 | ₹26,461 | ₹59.88 |
| FY25 | ₹1,06,502 | ₹30,514 | ₹69.67 |
- EPS up 45% in 2 years
- Strong visibility on cash flows for FY26 too
- Dividend yield steady at 3–4% through the chaos
11. Peer Comparison
| NBFC | P/E | ROE % | GNPA % | Div Yield |
|---|---|---|---|---|
| PFC | 6.09 | 21.0 | 1.64 | 3.73% |
| REC Ltd | 6.65 | 21.5 | 1.57 | 3.99% |
| IRFC | 27.1 | 12.8 | 0.00 | 1.19% |
| HUDCO | 16.9 | 15.7 | 3.2 | 1.81% |
REC is the closest peer. PFC leads in scale, earnings, and investor love.
IRFC looks “cheap” but has GoI shackles.
12. Miscellaneous – Shareholding, Promoters
| Holder | % (Mar 2025) |
|---|---|
| Promoter | 55.99% |
| FIIs | 18.84% |
| DIIs | 16.17% |
| Public | 8.97% |
| Shareholders | 11.26 lakh |
- FIIs increasing stake = underrated PSU alert
- Retail finally noticing this “boring compounder”
- No disinvestment risk short-term, but GoI trimming may unlock float and rerating
13. EduInvesting Verdict™
Power Finance Corporation is that PSU which didn’t get the “don’t perform” memo. High ROE, low NPA, strong dividends, and a business model that’s glued to India’s power story.
It’s not glamorous. It won’t build apps. But it finances the grid that powers your app download.
If PSU rerating has a poster child — PFC is sitting front and center, dividend slip in hand.
Metadata
– Written by EduInvesting Research | 18 July 2025
– Tags: Power Finance Corporation, PSU NBFC, Infra Lending, Dividend Stocks, REC Ltd, PFC vs IRFC, High ROE Stocks, Power Sector Finance
