Power Finance Corporation Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Power Finance Corporation Ltd trades at ₹376, in a confirmed uptrend and 22 weeks into that stage. That is −9.0% against its own 200-day average. It sits at 29% of a 52-week range of ₹339 to ₹469. On relative strength it is currently behind the NIFTY 500 on a trailing-13-week view (12 weeks and counting).

Today the stock is in a confirmed uptrend — week 22 of stage 2. At ₹376 it trades −9.0% versus its 200-day average and sits at 29% of its 52-week range (₹339–₹469).

Against the market, two honest reads. Cumulative: over the last 10.5 years the stock moved +504% while the NIFTY 500 moved +284% — ahead of the index over the full window. Recent form: on a trailing-13-week view the stock is currently behind (12 weeks and counting; last ahead the week of 2026-06-12) — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Power Finance Corporation Ltd's story is not scored yet against the markers our research file set on 17 May 2026. Where it sits in its own cycle: MID_CONTRACTION. Still open: ₹1,100 Cr H1 FY26 exchange loss on an unhedged Euro portfolio — and it contradicted the earlier '95% hedged' assurance.

Our read, 17 May 2026. A decade-low-NPA PSU power lender trading at 1.1x P/BV on 21% ROE — earnings-driven re-rating capped by a PSU discount, forex noise and the PFC-REC merger overhang.

From the numbers. P/BV at 1.1x is the 76th percentile of PFC's 10-year range and 1.6x its 0.7x median — the cycle agent labels this FULLY_EXPANDED with EARNINGS_DISCONNECT. P/BV peaked at 1.7x in Jun 2024 from a 0.5x trough in Jun 2020…

From the price. Price stage 2, week 22 — below its 200-day line, relative strength falling.

From the research. A decade-low-NPA PSU power lender trading at 1.1x P/BV on 21% ROE — earnings-driven re-rating capped by a PSU discount, forex noise and the PFC-REC merger overhang.

🚨 Where they disagree. P/BV at 1.1x is the 76th percentile of PFC's 10-year range and 1.6x its 0.7x median — the cycle agent labels this FULLY_EXPANDED with EARNINGS_DISCONNECT. P/BV peaked at 1.7x in Jun 2024 from a 0.5x trough in Jun 2020, a 3.4x expansion over which EPS grew 177.5%. The current P/BV YoY trend is CONTRACTING (smoothed −21.98%) — the multiple is mean-reverting off its peak even as book value and EPS compound. For a financial, the lens is P/BV ÷ ROE: at 1.1x P/BV on 20.7% ROE the stock is reasonably, not cheaply, priced. The DII_SELLING institutional signal confirms domestic institutions are trimming into the expanded multiple.

What is proven. A decade-low-NPA PSU power lender trading at 1.1x P/BV on 21% ROE — earnings-driven re-rating capped by a PSU discount, forex noise and the PFC-REC merger overhang.

What is not proven yet. ₹1,100 Cr H1 FY26 exchange loss on an unhedged Euro portfolio — and it contradicted the earlier '95% hedged' assurance.

The test written in advance. Forex loss on unhedged Euro portfolio — Forex loss on unhedged Euro portfolio Q-by-Q exchange loss/reversal vs Euro/USD movement by the next result.

The test written in advance. PFC-REC merger overhang on dividend policy and share-swap ratio — PFC-REC merger overhang on dividend policy and share-swap ratio Share-swap ratio announcement and merger scheme filing by the next result.

The test written in advance. Residual Stage III thermal-project tail risk — Residual Stage III thermal-project tail risk NCLT resolution progress on the 11 stressed projects by the next result.

The dot is where the company is now; the dashed line is the level that would settle the question; a tinted band is where management says it is heading.

Lever 1 · Operating leverage — BUILDING. Standalone net NPA at a 10-year low of 0.37% and gross NPA down 84 bps to 1.87%; each resolved stressed project converts into a provision-reversal PAT tailwind. What proves it keeps working: Asset Quality Improvement (decade-low NPA driving provision reversals). It stops working if Q-by-Q exchange loss/reversal vs Euro/USD movement.

Lever 15 · Market-share gains — BUILDING. Standalone loan asset book grew 14% YoY to ₹5,61,210 Cr on record H1 FY26 disbursements of ₹86,000 Cr (+30% YoY). What proves it keeps working: Loan Book Growth on Record Disbursements. It stops working if Q-by-Q exchange loss/reversal vs Euro/USD movement.

Lever 10 · New geographies — BUILDING. Renewable loan book at ₹84,680 Cr — India's largest renewable sector financier, growing 28-35% YoY. What proves it keeps working: Renewable Energy Financing Leadership. It stops working if Q-by-Q exchange loss/reversal vs Euro/USD movement.

Lever 6 · Order-book wins — BUILDING. In-principle board approval for a PFC-REC merger creating a ~₹11.5 lakh crore power-sector financing entity — transformational but unpriced and unscheduled. What proves it keeps working: PFC-REC Merger Optionality. It stops working if Q-by-Q exchange loss/reversal vs Euro/USD movement.

Sources: our stock research file (17 May 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue For a bank, revenue is everything the franchise earns — interest on the loan book plus fee and other income.

Power Finance Corporation Ltd reported ₹28,527 Cr of income in the Jun 26 quarter, +0.0% year on year. Over 10 years it has compounded at 15.3% a year. The last full year, FY26, came in at ₹1,15,450 Cr. The last four reported quarters add to ₹1,15,432 Cr.

Why this happened. Loan-book growth is running ahead of the conservative 10-11% guidance — standalone loan asset book at ₹5,61,210 Cr (+14% YoY) with H1 FY26 disbursements of ₹86,000 Cr, a 30% YoY increase. Group loan asset book crossed ₹11 lakh crore. Management emphasised the need to disburse ~₹2,00,000 Cr annually to hold this trajectory on an enlarged base, with high routine repayments of ₹85,000-1,00,000 Cr a structural headwind to net growth.

FY26 revenue came in at ₹1,15,450 Cr (+8.4% on the year), capping 10 years at 15.3% compound. The latest quarter (Jun 26) printed ₹28,527 Cr, +0.0% year on year.

Pace check: the last four quarters averaged +4.9% growth against the decade's 15.3% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +4.6% over the last 4 quarters against +10.3%/yr over the last 8 — rolling over; TTM profit +4.1% vs +10.3%/yr — rolling over.

Net margin Net margin — what the bank keeps of every ₹100 of revenue after every cost, provision and tax. It is the cleanest single margin we can read for a lender.

Power Finance Corporation Ltd's net margin is 31.5% in the Jun 26 quarter, +0.0 percentage points against the same quarter a year ago. That is the widest this company has ever printed on a full-year basis. Across 13 fiscal years the net margin has ranged 8.1% to 29.1%. The current quarter is running above every full year in that window.

Why this happened. The spine of the thesis. Consolidated net NPA fell from 0.85% (FY24) to 0.38% (FY25) and standalone net NPA reached a historic 10-year low of 0.37% by H1 FY26. Stage III declined from 2.68% to 1.64% YoY. Resolutions — KSK Mahanadi at >100% recovery with ₹1,815 Cr provisioning reversed, TRN Energy, Lanco Amarkantak — each release provisions straight into PAT. A residual pool of 21 stressed projects worth ~₹9,348 Cr carries 84% provisioning, leaving further reversal optionality.

The latest quarter's net margin is 31.5%, +0.0 pp against the same quarter a year ago. Across 13 fiscal years the net margin has ranged 8.1%–29.1%, and FY26's 29.1% is the top of that band — a record year.

Why: the numbers show the net margin move clearly, but the cost lines behind it sit below what we hold — so we state the move without inventing its driver.

Worth repeating from the valuation section: cheap against its own history on record margins is not the same thing as cheap — a record margin flatters every ratio built on top of it.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Power Finance Corporation Ltd earned ₹8,998 Cr of net profit in the Jun 26 quarter, +0.2% year on year. It is the 11th consecutive quarter of growth. Full-year FY26 profit was ₹33,625 Cr. The 10-year compound rate is 18.5%. That is 31.5% of the quarter's revenue. The same quarter a year earlier earned ₹8,981 Cr.

Jun 26 profit was ₹8,998 Cr, +0.2% year on year — the 11th consecutive quarter of growth. On the full year, FY26 printed ₹33,625 Cr (+10.2%), and the 10-year compound rate is 18.5%.

Why profit moved: revenue contributed +0.0% and the margin +0.0 pp — the quarter was revenue-led, with the margin roughly flat.

Pace comparison, last four quarters: profit +4.4% vs revenue +4.9%. Profit and revenue are moving roughly in step.

Asset quality — the ladder Gross NPA is the slice of the loan book where repayments have stopped. Net NPA is what remains after the money already set aside against those loans. Falling is healing; rising is damage arriving.

Power Finance Corporation Ltd's gross NPA is 0.66% of the loan book in Mar 26, down from 1.64% a year ago. Net of provisions already set aside, 0.13% remains. That is the 10th straight quarter of improvement. Across the 11 quarters held here the book has ranged 0.66% to 3.40%.

Mar 26: gross NPA at 0.66% and net NPA at 0.13%, against 1.64% / 0.38% a year ago. Over the 11 quarters we hold, the book's worst reading was 3.40% and its best is 0.66% — which is the current print. The ladder has now improved for 10 consecutive quarters.

The synthesis: profit growth at a bank is only as good as the book behind it, and this book is healing on a multi-quarter streak. A note on depth: quarterly provisioning detail is not in our numbers yet, so this ladder reads levels and trend, not the cost of the cleanup.

Why the ladder moved: recoveries, write-offs and slippages each play a part, and that split sits below what we hold — the numbers show the healing; the driver mix does not travel with them.

The loan book We read the loan book through revenue — when the book grows, revenue grows with it. It is a rough proxy, and we say so: rate moves and fee swings can shift it a few points in any one year.

Power Finance Corporation Ltd's revenue grew +8.4% in FY26 to ₹1,15,450 Cr, so the book is growing. The latest quarter ran +0.0% year on year. The net margin on that income is 31.5%, +0.0 percentage points against a year ago. Interest income is a proxy for the book; rate moves can shift it a few points in any one year.

FY26 revenue was ₹1,15,450 Cr, +8.4% on the year, and the latest quarter ran +0.0% year on year. The net margin on that revenue is 31.5% this quarter (+0.0 pp YoY) — growth with a widening margin on it.

The synthesis: a lender compounds when the book grows while the margin holds and the loan book stays clean — gross NPA is the loan-quality read we carry here.

Returns on equity and assets Two numbers rate a bank: ROE — what it earns on shareholder money — and ROA — what it earns on everything it deploys. ROE above ~13–15% earns its keep; below that, growth builds book slowly.

Power Finance Corporation Ltd earns a return on equity of 21% in FY26. Its trough over the ladder below was 6% in FY17. For a lender the balance sheet is the operating asset, so equity return and asset return have to be read together.

FY26 ROE came in at 21%, recovered from a FY17 trough of 6%. Return on assets is withheld on this page — its two source series disagree for this quarter. That clears the bar a bank must beat for its book value to compound.

Why ROE moved: profit compounded 18.5% a year over 10 years while the equity base grew more slowly — earnings recovering faster than book value builds is what lifts ROE off a trough.

The quarterly return-on-equity and return-on-assets curves, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 27% on reported income across 15 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

Debt

For a bank, borrowings are raw material, not a warning sign — solvency is read through the returns and the loan book. A manufacturer’s debt is a claim against its profits, so the debt-to-equity lens that works everywhere else misleads on a lender and is not applied here.

A manufacturer’s debt is a claim against its profits; a bank’s borrowings are its inventory — money taken in to be lent out. The debt lens that works everywhere else misleads here, so this page does not apply it. The solvency questions for a bank — is the loan book sound, is the equity earning — are read through the loan-book and returns sections above.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Foreign institutions added 2.6 points of Power Finance Corporation Ltd over 8 quarters, the biggest move on the register. That takes foreign institutions to 20.5% of the company. Domestic institutions moved −2.5 points over the same window, to 14.5%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Foreign institutions: +2.6 points over 8 quarters to 20.5%; Domestic institutions: −2.5 points over 8 quarters to 14.5%; Promoters: +0.0 points over 8 quarters to 56.0%.

Why the register moved: rotation — foreign institutions +2.6 points against domestic institutions −2.5 points over 8 quarters, with promoters holding steady — one class of institutions handing the register to the other, not a verdict change by the people closest to the numbers.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Power Finance Corporation Ltd: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre. The Z-score was built for manufacturers and is not applied to banks and lenders, so solvency here is read from the capital and asset-quality lines instead.

The safety line in one sentence: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre.

Valuation For a bank we price the book, not the earnings: P/BV is what the market pays for each ₹1 of the bank's net worth. A bank below 1× book is priced below the value of what it owns, net of what it owes.

Power Finance Corporation Ltd trades at 0.9× P/BV, mid-range by its own standards (57th percentile). Its long-run median P/BV is 0.7×, measured across 10.5 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/BV of 0.9× is mid-range by its own standards (57th percentile), against a long-run median of 0.7× measured over 10.5 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year book value grew while the price moved −9.7% — price and book moved together, holding the multiple in its range.

The price move, decomposed: over 5y, of the +29.6%/yr price move, ~+23.3%/yr came from book-value growth and ~+6.3 pp from the multiple (expanding); over 10y, of the +15.5%/yr price move, ~+14.2%/yr came from book-value growth and ~+1.3 pp from the multiple (expanding). The split is the honest approximate (price return minus book-value growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is unremarkable against its own past, so the story rests on the book-value line underneath it, not the multiple.

The PEG ratio and its quarterly curve, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 27% on reported income across 15 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

Stage: Topping out Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Power Finance Corporation Ltd reads as topping out on its fundamental arc. Topping out — revenue and profit growth have decelerated hard (revenue growth +18.1% at its peak → +4.6% latest) while ROE still reads 21.0%. The read is built from 8 quarters across 4 curves, on partial evidence.

Why it matters: decelerating from a peak is where good stories quietly end — the multiple usually notices late.

Return readings here are annual, not quarterly — read as level and direction only; they can confirm the growth curves but never drive the stage on their own.

A partial read: at least one curve is short, or the returns curve is not the computed quarterly series — hold the stage word a little more loosely.

4-Factor Sector Score

51.1/100 — rank 3 of 6 in Finance - PSU Lending · 75% evidence confidence

Power Finance Corporation Ltd scores 51.1 out of 100 against the 6 companies it is compared with in Finance - PSU Lending, ranking 3. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 16.7 + 16.4 + 15.7 + 2.3 = 51.1. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if ROA rolls over or gross NPA rises while sector-relative strength deteriorates.

Said versus delivered

What Power Finance Corporation Ltd's management promised, set against what actually arrived — 3 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

Loan Growth Guidance Moderation · 7 November 2025. In the Feb 2025 call, management affirmed analyst expectations for AUM growth of 12-13% for FY25 and implicitly the following year, stating they would maintain a similar level as FY24's ~14% growth. However, in the Nov 2025 call, management is maintaining a significantly lower loan book growth guidance of 10-11% for FY26, representing a material moderation in the company's growth outlook. Earlier call (Feb 2025): “Avinash Singh: so I mean you expect AUM growth of about 12%, 13% for this year and next? Parminder Chopra: Yes. For the current financial year, we are expecting that we will be able to maintain the similar level as was done in the previous year.” Later call (Nov 2025): “For FY26, we continue to maintain our loan book growth guidance of 10% to 11%.”

Understated Forex Risk · 7 November 2025. In the May 2025 call, management projected confidence in its forex risk management, highlighting a 'proactive approach' and stating the US Dollar portfolio was 'Nearly 100% exchange rate risk is hedged'. This was contradicted in the Nov 2025 call by the disclosure of a massive INR 1,100 crore loss in H1 FY26, primarily from unhedged Euro exposure, a cross-currency risk not previously emphasized, undermining the earlier narrative of comprehensive risk control. Earlier call (May 2025): “Speaking of foreign currency borrowing, I would like to highlight our proactive approach to managing forex risks through active treasury. Right now, 95% of our portfolio is hedged for exchange risk. Nearly 100% exchange rate risk is hedged for US Dollar denominated portfolio.” Later call (Nov 2025): “In H1 FY26, we saw an exchange loss of around 1,100 crore on our unhedged portfolio and also on some portion of the derivative book. The loss was primarily due to movement in the Euro/USD exchange rate...”

Shifting Explanation for High Repayments · 7 November 2025. In the May 2025 call, management characterized high loan prepayments as simply being in the 'normal course of business', suggesting they were not a structural concern. However, in the Nov 2025 call, management offered a new, more specific explanation, revealing for the first time that the portfolio has a surprisingly short 'around six years is the asset profile'. This new detail contradicts the prior benign characterization and is material for understanding the loan book's high churn rate. Earlier call (May 2025): “Prepayment. What I understand is, is there in the normal course of business for each of the financial institution. Yes, I agree, in some years there are huge prepayments...” Later call (Nov 2025): “So it”.

Every quote above is taken word for word from the company’s own earnings calls.

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