PFC management shared that its disbursements typically accelerate in the last quarter and reiterated its guidance of achieving loan growth similar to that in the previous year.

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Motilal Oswal Report

Power Finance Corporation Ltd. (standalone) trades at 0.8x FY27E P/BV and four times FY27 P/E, and we believe that the risk-reward is attractive considering decent visibility on loan growth, earnings growth, stressed asset resolutions, and healthy return ratios.

We reiterate our Buy rating with an SoTP (Sep’26E)-based target price of Rs 475 (based on 1x target multiple for the PFC standalone business and Rs 184/ share for PFC’s stake in REC after a hold-co discount of 20%).

Key risks:

  1. rise in exposure to private infrastructure projects as these loans fall outside PFC’s core expertise of lending to power projects;

  2. increase in exposure to power projects without power purchase agreements,

  3. compression in spreads and margins due to aggressive competitive landscape, and

  4. a slowdown in the offtake of renewable energy projects, driven by weak power demand.

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