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INVESTMENT INSIGHTS

Check Before You Invest : Power Finance Corporation Ltd

BSE: 532810 NSE: PFC ISIN: INE134E01011
  |   Sector:  BFSI   |   Industry:  Finance Term Lending

Snapshot

Q.1 Which industry/sub-sector does Power Finance Corporation Ltd belong to?
Power Finance Corporation Ltd belongs to the BFSI sector, operating specifically within the Finance Term Lending segment.
Q.2 Is Power Finance Corporation Ltd a good quality company?
Power Finance Corporation Ltd is a average quality company, based on a somewhat consistent 10-year financial track record.
Q.3 Is Power Finance Corporation Ltd undervalued or overvalued?
Power Finance Corporation Ltd appears Somewhat overvalued, as its key valuation ratios are above with their past averages.
Q.4 Is Power Finance Corporation Ltd a good buy now?
Power Finance Corporation Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Operating Income growth is 16.91% for FY-2025, which is above its 5-year CAGR of 11.36%, indicating faster growth.
Q.2 Return on Assets of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Return on Asset is 2.8%, which is above its 5-year historical median of 2.5%, indicating improved earnings on assets.
Current Level 5-year
Historic Median
NPM% 28.65 27.3
PPOP% 20.31 13.94
RoA% 2.8 2.5
Q.3 Return on Equity (ROE) of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Return on Equity is 27.9% for FY-2025, which is below its 5-year historical median of 28.3%, indicating the business is making worse use of its shareholders capital.
Q.4 Pre-provisioning operating profit margin of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 20.31% for FY-2025, which is above its 5-year median(13.94%), indicating increasing margins.
Q.5 Net Profit Margin of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 28.65% for FY-2025, which is above its 5-year median( 27.3%), indicating increasing margins.
Q.6 Total Asset growth of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Total Asset growth is 13.46% for FY-2025, which is above its 5-year CAGR of 11.19%, indicating faster growth.
Q.7 Capital Adequacy ratio of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Capital Adequacy ratio (CAR) is 22.08% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.
Q.8 Asset Quality of Power Finance Corporation Ltd?
Power Finance Corporation Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 2.46% for FY-2025, which is below its 5-year median 4.72%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 0.89% which is below its 5-year median( 1.87%), indicating improving asset quality.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Power Finance Corporation Ltd?
Promoters hold 55.99% of the Power Finance Corporation Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of Power Finance Corporation Ltd vs Industry Peers?
Power Finance Corporation Ltd AUM CAGR is 11.19%, compared to the 5-year industry median CAGR of 11.57%, indicating slower growth and losing its market share.
Q.2 Profit metrics (NPM, PPOP, RoA) of Power Finance Corporation Ltd vs industry peers
Power Finance Corporation Ltd profit metrics are above the industry median level of 12.5%, indicating stronger profitability compared to peers.
Profit Metrics
Current Level 5-year
Industry Median
NPM% 28.65 26.65
PPOP% 20.31 8.94
RoA% 2.8 1.9
Q.3 Operating efficiency of Power Finance Corporation Ltd vs industry peers?
Power Finance Corporation Ltd ROCE (9.7) is above the industry median of (7.5); while the current ROE (28.3) are above than the 5-year average Industry ROE (21). This shows that the business is positioned in the top quartile of the industry.
Operating Efficiency
Current Level 5-year
Industry Median
NPM% 28.65 26.65
PPOP% 20.31 8.94
RoA% 2.8 1.9
ROCE% 10.1 7.5
ROE% 27.9 21

Valuation & price assessment

Q.1 Stock return of Power Finance Corporation Ltd over the last decade?
Over the last 9 years, the stock has delivered a CAGR of 21% based on the current price.
Q.2 What return has the stock given over the last decade?
9Y 5Y 3Y 1Y
Share Price
CAGR		 21% 39% 49.7% 10.3%
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 5.86 4.62 13.28
Price to Book 1.09 1.03 1.13
Price to Sales 1.28 1.20 4.77
EV to EBITDA 4.4 4.86 10.31
Q.4 Valuation ratios of Power Finance Corporation Ltdvs historical and industry averages?
The current Price to book ratio (P/B) 1.09% is higher than its historical median of 1.03%, indicating that at the current price the stock is overvalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?
Power Finance Corporation Ltd return on invested capital (ROIC) is 7.14% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

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