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Our Rating: OBSERVE & HOLD
Mehabe score: 8 G Factor: 6 Piotski Score: 2 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 6 and Piotski score of 2.
Description
Power Finance Corporation (Govt. of India undertaking & Schedule-A Navratna CPSE #) is engaged in the business of extending financial assistance to power sector and is a Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC) registered with Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC).Site:PFC
Market Cap:
Rs 34,202 cr
Price:
130.0
Trading pe:
3.68x
Book-value:
226/share
Div yield:
7.33 %
Earning yield:
9.01%
Face-value:
10.0/share
52week high:
140.50
52week low:
78.85
Technical Analysis
Stock trades at 130.0, above its 50dma 119.14. It also trades above its 200dma 112.46. The stock remains bullish on techicals
The 52 week high is at 140.50 and the 52week low is at 78.85
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.57 times its book value
-Stock is providing a good dividend yield of 7.33%.
-‘s median sales growth is 16.73% of last 10 years
Weakness
– has low interest coverage ratio.
– might be capitalizing the interest cost
-Promoter holding has decreased over last 3 years: -9.93%
Competition
– The industry trades at a mean P/E of 6.0x. I R F C trades at the industry’s max P/E of 8.74x. PFC trades at a P/E of 3.68x
– Industry’s mean G-Factor is 4.5 while the mean Piotski score is 8.0. PFC has a G-Factor of 6 and Piotski scoreof 2.
– Average 1 month return for industry is 16.3%. The max 1- month return was given by Tour. Fin. Corp.: a return of 27.5 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 18149.0 cr compared to Rs 16193.0 cr for period ended Mar 2020, a rise of 12.1%
Operating Profits reported at Rs 16241.0 cr for period ended Mar 2021 vis-vis 12009.0 for period ended Mar 2020 .
Operating Margins expanded 1532.5 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 11.07 compared to Rs 10.96 for previous quarter ended Dec 2020 and Rs 1.78 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 71656.0 cr for period ended Mar 2021 vis-vis sales of Rs 62189.0 cr for the period ended Mar 2020, a healthy growth of 13.2%. The 3 year sales cagr stood at 13.8%.
Operating margins expanded to 90.0% for period ended Mar 2021 vis-vis 88.0% for period ended Mar 2020, expansion of 200.0 bps.
Net Profit reported at Rs 11748.0 cr for period ended Mar 2021 vis-vis sales of Rs 7122.0 cr for the period ended Mar 2020, rising 39.4%.
Company recorded a healthy Net Profit CAGR of 20.7% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs 0.0 cr for period ended Mar 2021 vis-vis Rs -42690.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 57% on a 1 Year basis vis-vis a return of 16% over the last 3 Years. – The compounded sales growth on a TTM bassis is 15% vis-vis a compounded sales growth of 31% over the last 3 Years. – The compounded profit growth on a TTM basis is -2% vis-vis a compounded profit growth of 47% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 17.32% vis-vis 17.37% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 7.14% vis-vis 6.45% for Dec 2020
Conclusion
– Stock is trading at 0.57 times its book value
-Stock is providing a good dividend yield of 7.33%.
-‘s median sales growth is 16.73% of last 10 years – has low interest coverage ratio.
– might be capitalizing the interest cost
-Promoter holding has decreased over last 3 years: -9.93%
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 119.14 and is trading at 130.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
