PFC surges on eyeing a healthy loan growth in the current fiscal

Power Finance Corporation (PFC) is currently trading at Rs. 163.90, up by 2.45 points or 1.52% from its previous closing of Rs. 161.45 on the BSE.

The scrip opened at Rs. 162.30 and has touched a high and low of Rs. 163.50 and Rs. 156.80 respectively. So far 189010 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 10 has touched a 52 week high of Rs. 348.95 on 24-Nov-2010 and a 52 week low of Rs. 130.20 on 26-Aug-2011.

Last one week high and low of the scrip stood at Rs. 169.05 and Rs. 152.50 respectively. The current market cap of the company is Rs. 21310.30 crore.

The promoters holding in the company stood at 73.72% while Institutions and Non-Institutions held 16.58% and 9.70% respectively.

State-owned PFC is optimistic of registering a healthy loan growth of over 20 percent in the current fiscal despite some regulatory concerns relating to the energy sector. The company, which posted around 17 percent growth in the loan sanctions in the first quarter of current fiscal, witnessed a healthy 26 percent jump in advances during the second quarter and hence expects the momentum to continue.  The power finance firm for the current fiscal plans to disburse around Rs 35,000 crore of loans against the aim of borrowing around Rs 43,000 crore in this period.

Coal shortages, stringent environmental norms are some concerns facing the Indian power sector. Other key challenges facing the sector and power utilities include changing fuel quality & fuel mix; coal blending, upgrades or addition of emissions controls, extended time between major outages and loss of experienced plant testing and operating personnel. However, the company witnessing some positive actions in the regulatory front hopes that all issues would be solved in time. Reportedly, Tamil Nadu government alleged Reserve Bank of India (RBI) of blacklisting its state’s electricity board. However, state government's announcement of a power tariff hike for state electricity boards (Sebs) bought the much needed respite to the financial institutions, thereby reducing concerns relating to credit default by such entities. 

Meanwhile, PFC plans to hold road shows by the month-end in Singapore, Hong Kong and London to raise $1 billion PE fund through external commercial borrowings to ease funding concerns of the Indian power sector. It has already appointed Royal Bank of Scotland Group Plc. (RBS) and Bank of America (BoA) as merchant bankers. Adding to the positive for the company, ICICI Bank, Infrastructure Leasing and Financial Services (IL&FS), Infrastructure Development Finance Co. (IDFC) and IFCI instilled confidence in its proposed $1 billion PE fund at a time when funding scarcity can worsen energy deficit.

The net profit of the company for the September quarter declined by 40.17% to Rs 419.34 crore as compared to Rs 700.84 crore for the corresponding quarter of the previous year. The company’s total income has increased by 23.90% at Rs 3145.05 crore for the second quarter of the current fiscal from Rs 2538.43 crore for the corresponding quarter of the previous year.