Power Finance Corporation Ltd.
NSE: PFCPower Finance Corporation Ltd.: A 30-second snapshot
Power Finance Corporation (PFC) is a PSU infrastructure-finance NBFC lending primarily to the power sector, trading at ₹421.10 as of the run date. At a trailing PE of 5.37x and ROE of 20.47%, PFC ranks first among its assigned Banking peers on both metrics, though it carries a debt-to-equity of 586x and has generated no positive free cash flow in the persistence record. The stock is 13.4% below its 52-week high, below the 50-DMA of ₹437 but above the 200-DMA of ₹394, with RSI at 37.75.
P/E
5.4
Forward P/E
6.5
ROE
+20.5%
Debt / Equity
586.02
Profit Margin
+54.3%
Div. Yield
+3.4%
5Y ROE > 15%
4/5
5Y FCF > 0
0/5
Quality
55/100
News
8 headlines · 4 positive · 0 negative
PFC Q4 & FY26 Results: Standalone Net Profit ₹6,324.57 Cr, Final Dividend ₹3.65/Share - scanx.trade
scanx.trade
PFC, REC boards clear merger, seek approval from President - The Times of India
The Times of India
Power Finance Corporation board moves REC merger proposal for Presidential approval - CNBC TV18
CNBC TV18
PFC Q4 Results: Profit rises 24% to Rs 6,325 crore as interest income grows - The Economic Times
The Economic Times
PFC Q4FY26 Results This Week: Check Board Meeting Date, Dividend News And Other Key Details - NDTV Profit
NDTV Profit
Recent context
- ·Q4 FY26 standalone net profit rose 24% year-on-year to ₹6,325 crore, driven by interest income growth, with a final dividend of ₹3.65 per share declared for FY26.
- ·The PFC board in May 2026 approved a PFC-REC merger proposal and submitted it for Presidential approval, marking a significant potential structural change for both PSU lenders.
- ·Mean analyst rating of 1.14 across 14 analysts (1-5 scale, lower = more constructive), the smallest coverage count in the peer group at 14 names.
Strengths
- +ROE of 20.47% has remained above 15% in 4 of the years captured (out of 5 available), indicating persistent above-threshold return generation for a PSU lender.
- +Trailing PE of 5.37x is the lowest in the 6-stock Banking peer group, while profit margin of 54.3% reflects the high-NIM, low-opex structure of a focused infrastructure on-lender.
- +Q4 FY26 standalone net profit of ₹6,325 crore rose 24% year-on-year, with a final dividend of ₹3.65 per share declared — current trailing dividend yield stands at 3.41%.
- +Price is above the 200-DMA (₹394), and identified technical support levels sit at ₹390, ₹381, and ₹363, with the nearest resistance cluster at ₹423-₹432.
Weaknesses
- −FCF is positive in 0 of the years available in the persistence record, with debt classified as rising; the business is entirely reliant on continuous capital market access to fund loan-book growth.
- −Debt-to-equity of 586x, while structurally characteristic of PSU infrastructure NBFCs, means any deterioration in power-sector asset quality or a sustained rise in cost of funds would directly compress the 54.3% profit margin.
- −5-year revenue growth of -15.4% indicates topline contraction despite earnings growth; profit expansion has been driven by margin widening, not volume growth, raising sustainability questions if conditions normalise.
- −Quality score of 45 ranks 4th of 6 among Banking peers, and the pending PFC-REC merger proposal adds integration complexity and capital allocation uncertainty while regulatory approval remains open.
Open questions
- ?Does the 10.8% five-year earnings CAGR reflect a durable structural advantage in PSU power-sector lending, or has it been primarily driven by one-time factors such as NPA recoveries and declining credit costs that may not repeat?
- ?How would a 100-basis-point increase in PFC cost of borrowing affect net interest margin given the 586x debt-to-equity, and what proportion of the loan book is at fixed versus floating rates?
- ?What are the realistic timelines, capital requirements, and integration risks involved in a PFC-REC merger, and how might the combined entity's capital adequacy ratios change post-merger?
- ?The peer group assigned is retail Banking — does evaluating PFC against HDFC Bank, Bajaj Finance, and HDFC Life provide meaningful comparisons for valuation, or are dedicated infrastructure-NBFC peers (REC, IREDA, PNB Housing) a more relevant reference frame?
Peer comparison: Banking
Ranks 4 of 6 on quality| Symbol | Name | P/E | ROE | Quality |
|---|---|---|---|---|
| PFC | Power Finance Corporation Ltd.You're viewing | 5.4 | +20.5% | 45 |
| Industry avg | across 5 peers | 31.2 | +14.2% | 39 |
| BAJFINANCE | Bajaj Finance Ltd. | 29.1 | +17.9% | 53 |
| AXISBANK | Axis Bank Ltd. | 15.1 | +13.2% | 50 |
| HDFCBANK | HDFC Bank Ltd. | 16.6 | +13.8% | 50 |
| BAJAJFINSV | Bajaj Finserv Ltd. | 28.8 | +14.6% | 23 |
| HDFCLIFE | HDFC Life Insurance Company Ltd. | 66.2 | +11.3% | 20 |
Technical state
Current price
₹421.10
SMA 50
₹437.04
SMA 200
₹393.83
RSI (14)
37.8 (neutral)
From 52w high
-13.4%
1Y return
+6.6%
3M return
+0.9%
50-DMA
Below
200-DMA
Above
Algorithmic support levels
Algorithmic resistance levels
Risk flags
- highDebt-to-equity of 586x reflects the structural on-lending model of a PSU infrastructure NBFC, but vastly exceeds every peer in the assigned Banking group (HDFC Bank, Axis Bank, Bajaj Finance all below 10x D/E). Any deterioration in power-sector borrower repayment or a sustained rise in cost of funds would directly compress the net interest margin that currently sustains a 54.3% profit margin.
- highFCF was positive in 0 of the years captured in the persistence record, with debt trend classified as rising. Balance-sheet growth is funded entirely through external borrowings; continuous capital-market access is a prerequisite for sustaining current loan-book expansion.
- medium5-year revenue growth of -15.4% contrasts with 5-year earnings growth of +10.8%. Profit expansion against a shrinking topline has been driven by margin widening; if revenue contraction persists or cost of funds rises, this divergence may not be sustainable.
- mediumIn May 2026, the PFC board cleared a PFC-REC merger proposal and forwarded it for Presidential approval. A consolidation of two large PSU infrastructure lenders introduces integration complexity, capital allocation uncertainty, and potential regulatory conditions whose outcome remained open as of the run date.
- lowPFC is benchmarked in a Banking peer group alongside retail private-sector lenders (HDFC Bank, Axis Bank, Bajaj Finance, Bajaj Finserv, HDFC Life). Business models and statutory leverage norms differ materially; PE rank of 1st of 6 (lowest, at 5.37x) and ROE rank of 1st of 6 (highest, at 20.47%) partly reflect structural differences rather than pure outperformance.
Cross-section contradictions
- Trailing PE of 5.37x and ROE of 20.47% each rank 1st of 6 peers on their respective metrics, yet the quality score of 45 ranks 4th of 6 and FCF is positive in 0 of the available years — headline profitability metrics diverge from underlying cash-generation quality.
- 5-year revenue growth of -15.4% coexists with 5-year earnings growth of +10.8% and a 54.3% profit margin; earnings have expanded through margin widening rather than volume growth, a pattern that may face headwinds if borrowing costs rise.
For informational purposes only. Not investment advice. VivaTrades is not a SEBI-registered Investment Adviser or Research Analyst. Market data sourced from public feeds; consult a registered adviser before any investment decision.
Fundamentals & technicals: refreshed 25 Jun 2026 · refreshed daily at 01:00 IST
AI synthesis (narrative, snapshot, strengths/weaknesses, peer ranking): generated 1 Jun 2026 · rotates through NIFTY 500 every ~5 days