Continuing their winning streak, shares of Power Finance Corporation recorded a new 52-week high of ₹160.80 apiece on Friday, surpassing their previous high of ₹158. The stock has risen for ten trading sessions in a row, rising from ₹131.50 per share to its current price of ₹156, producing a return of 18.63 percent.
PFC stock started flying high after the company posted its highest-ever quarterly net profit in the September quarter. Since its Q2 result announcement on November 10, the stock has delivered 35.61 percent returns to its shareholders.
At current levels, the stock is 8 percent away from its 2014 high level of ₹172.38. In addition, the stock has to travel 17.53 percent from its current position to reach its historical peak of ₹192.50 set in October 2010.
At the prevailing price, the stock traded at a price-to-earnings (P/E) multiple of 2.94x, which is much lower than the industry P/E of 25.9x. It has a dividend yield of 7.55 percent.
In the past 12 months, the company has declared an equity dividend amounting to ₹12.50 per share.
Power Finance Corporation Ltd. is a Maharatna CPSE and the country's leading non-bank financial corporation. The company is engaged in power sector financing and the integrated development of the power and associated sectors. PFC clients include state power utilities, central power sector utilities, power departments, and private power sector utilities.
According to the Public Enterprises Survey, Power Finance Corporation was ranked among the "Top 10 profit-making CPSEs" in FY2020–21.
On October 18, state-owned REC Ltd. and Power Finance Corporation inked a pact to provide ₹8,520.92 crore in finance for setting up a 1,320 MW thermal power plant at Buxar by SJVN Thermal Private Ltd.
According to reports, the company is also looking into financing opportunities for electro-mechanical components of projects in the "other infrastructure" sector (such as metro, ports, and airports).
PFC Group can now lend to the infrastructure and logistics sectors, and to start with, lending up to 30 percent of its net worth has been permitted by the Ministry of Power.
For the September ending quarter, PFC posted its highest-ever quarterly consolidated net profit of ₹5,229.33 crore. The company reported a net profit of ₹5,023.42 crore in the corresponding quarter of last year.
The revenue from operations during the quarter rose to ₹19,344.39 crore from ₹19,282.60 crore in the same period a year ago. For H1FY23, the company delivered a profit after tax of ₹9,809 crore as against ₹9,578 crore in the year-ago period.
During the quarter, the company announced an interim dividend of Rs. 3 per share, over and above the Rs. 2.25 per share of the preceding quarter.
The consolidated net worth crossed the ₹1 lakh crore mark and stood at ₹1,02,280 crore (including non-controlling interest) as of September 30, 2022. This reflects PFC Group's strong fundamentals and would help leverage future business opportunities, the company said in an earnings call.
Following the solid quarter numbers, domestic brokerage firm ICICI Securites maintained its “buy” call on the stock with an unchanged target price of ₹191 apiece. The brokerage said the company exceeded its estimates in the September quarter.
The brokerage stated that the company's hedging proportion was improved to minimise the impact of the rupee depreciation. As of Q2 FY23, 95 percent of forex borrowings with a residual maturity of up to 5 years have been hedged, and out of this, 100 percent of US$-denominated borrowings have been hedged.
Also, nearly 68 percent of the total foreign currency portfolio has been hedged (vs. 44 percent YoY), it added.
5 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
