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Power Finance Corp: Margin improves but asset quality issues persist - Views on News from Equitymaster
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  • Nov 30, 2015 - Power Finance Corp: Margin improves but asset quality issues persist

Power Finance Corp: Margin improves but asset quality issues persist
Nov 30, 2015

Power Finance Corporation (PFC) declared its results for the second quarter of financial year 2015-16 (2QFY16). The institution has reported a robust 18% YoY and 20% YoY growth in net interest income and net profits respectively.

Performance summary

  • Interest Income grew by 11.4% YoY during 2QFY16 on the back of healthy 13% YoY growth in advances. For 1HFY16, interest income was up by 13% YoY.
  • Net interest margins improved from below 5% to slightly above 5% in 1QFY16 and 1HFY16.
  • At the net level, the profits have grown at a faster pace due to lower operating expenses and a sharp fall in extraordinary expenses. For 1HFY16, net profits were up by 14.5% YoY.
  • Net NPA to advances ratio increased to 1% at the end of 2QFY16, compared to 0.77% in 2QFY15.
  • Capital adequacy ratio (CAR) stands at healthy 21.23% as at the end of 2QFY16.

Financial performance snapshot

Rs (m) 2QFY15 2QFY16 Change 1HFY15 1HFY16 Change
Interest Income 62,230 69,320 11.4% 120,770 136,790 13.3%
Interest expended 37,310 39,910 7.0% 72,950 79,460 8.9%
Net Interest Income 24,920 29,410 18.0% 47,820 57,330 19.9%
Net interest margin 4.98% 5.27%   4.89% 5.19%  
Other Income 100 140 40.0% 150 180 20.0%
Operating expense 590 390 -33.9% 1,140 2,200 93.0%
Provisions and contingencies 2,840 3,810 34.2% 4,120 6,290 52.7%
Profit before tax 21,590 25,350 17.4% 42,720 49,020 14.7%
Extraordinary items 1,370 730 -46.7% 2,470 1,470 -40.5%
Tax 6,129 7,671 25.2% 11,690 14,840 26.9%
Effective tax rate 28.4% 30.3%   27.4% 30.3%  
Profit after tax/ (loss) 14,092 16,949 20.3% 28,570 32,720 14.5%
Net profit margin (%) 22.6% 24.5%   23.7% 23.9%  
No. of shares (m)         1,320  
Book value per share (Rs)*         241.8  
P/BV (x)         0.9  

* (Book value as on 30th September, 2015)

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