Why PFC Share Price is Rising

In the classic tale, the rabbit sprints ahead in the race, overconfident and flashy. But turtle proves that slow and steady wins the race.

The stock market can be similar - some companies shoot up like the rabbit, while others rise in a more measured way. One such stock with a measured rise is Power Finance Corporation (PFC).

PFC share price is on a steady rise for the past one year with over 200% gains.

The stock has started to move up once again, with PFC rising 15% in the past one month.

Let's explore the reasons behind PFC's steady rise.

#1 Good Quarterly Results

PFC share price surged 4% today on the back of healthy quarterly results which the company posted yesterday.

The power finance company reported a consolidated net profit of Rs 264.6 billion (bn), a 25% increase compared to last year. The increase in net profit was driven by a significant rise in interest income.

PFC's consolidated interest income stood at Rs 90.1 bn up 17.8% on a YoY basis. The strong income growth was backed by a 14% growth in the loan portfolio.

Strong growth in the renewable loan book (25% y-o-y) and discounts led to overall loan growth in FY24.

Asset quality improved with gross non-performing assets at 3.3% at the end of FY24 compared to 3.9% the previous year. Net non-performing assets (NPA) stood at 0.85% in FY24 compared to 1.1% in FY23.

#2 Consistent Performance

As far as financials go, PFC has done well over the years. Its net interest income and net profit have grown at a CAGR of about 10% over the last 5 years.

A rising loan book drove the increase in income, while reducing costs and higher lending rates pulled up the profits of the company.

It managed to significantly lower its NPA over the last five years.

Hence, a steady rise in income combined with improving asset quality boosted investor confidence.

However, due to aggressive lending, the company's provisions have also increased significantly.

#3 Bright Growth Prospects

PFC stands amid strong sectoral tailwinds in both the power and infrastructure sectors.

The company has diversified into new areas, including financing infrastructure and airports while boosting its presence in both the thermal power and renewable energy sectors.

PFC is also building out its expertise in infrastructure financing. The company disbursed infrastructure loans worth Rs 700 bn at the end of FY24 and it expects to become a mega player in this space.

In FY24, its renewable loan portfolio grew 25% YoY to over Rs 600 bn, solidifying its position as the leading renewable lender in India.

Further, the company bagged two major achievements in 2024 which will help in boosting its revenues.

In February, PFC signed a memorandum of understanding (MoU) with the Goa government to fund the state's green energy ambitions through a blended finance facility.

In January 2024, PFC received approval from the Reserve Bank of India to set up a finance company at the International Financial Services Centre (IFSC) in Gujarat's GIFT City.

All these factors suggest strong tailwinds ahead which boosts investor belief in the company.

How PFC Share Price has Performed Recently

Over five days, PFC share price is up by 9%, while it has gained 15% in 2024 so far.

Over the past year, the stock has given a stellar return of 245%.

The company touched its 52-week high of Rs 485.3 on 5 May 2024 and its 52-week low of Rs 130.4 on 17 May 2023.

About PFC

Power Finance Corporation Limited (PFC) is a leading non-banking financial institution (NBFI) in India, engaged in financing power projects.

Founded in 1986, PFC has played a crucial role in the development of India's power sector, providing financial assistance to a wide range of power projects, including generation, transmission, and distribution.

PFC offers financial products and services to support various power projects, including, rupee term loans and project term loans.

To know more, check out Power Finance Corporation company fact sheet and quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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