POWER FINANCE CORPORATION LIMITED

COMPANY PROFILE

Power Finance Corporation Limited was set up in the year 1986 and is dedicated to power sector financing and to the integrated development of the power and associated sectors. The Company is registered as a Non Banking Financial Company (NBFC) with the Reserve Bank of India (RBI). On July 28, 2010, RBI, classified the company as an ‘Infrastructure Finance Company (NBFC-ND-IFC)’. The Company provides financial resources to the power and asso- ciated sectors.

Power Finance Corporation Ltd product portfolio comprises of financial products and services like project term loans, equipment lease financ- ing, discounting of bills, short term loans, and consultancy services for various power projects in generation, transmission, and distri- bution sector as well as for renovation & modernization of existing power projects. In addition, PFC also provides technical, advisory and consultancy to power sector companies through its subsidiary company namely PFC Consulting Limited.

For FY 2014, the Company’s total income from operations grew by 24.92 % to Rs. 21,614.53 Cr. as against Rs. 17,302.61 Cr. in FY 2013. For the same period, net profit went up by 23.08 % to Rs. 5,461.84 Cr. as against Rs. 4,437.74 Cr. in FY 2013.

STOCK INFORMATION

STOCK PRICE

273.55

TARGER PRICE

265-255

SECTOR

FINANCE

SYMBOL (AT NSE)

PFC

ISIN

INE134E01011

FACE VALUE (IN RS.)

10.00

BSE CODE

532810

STOCK FUNDAMENTALS

MARKET CAP

35957.91

BOOK VALUE

208.50

EPS - (TTM) (IN RS. CR.)

0.00

P/E

0.00

INDUSTRY P/E

8.20

CREDIT COSTS INCREASING, ASSEST QUALITY RISK NOT OUT- SIZED

With RBI prudential norms being adopted by the company, albeit with one year lag and exceptions on transmission, distribution and hydro-electric generation, credit costs will remain elevated. From i) our effort at reconstructing the company’s project portfolio based on multiple public sources and ii) critical examination of key driv- ers like gas based generation exposure, share of commissioned projects financed etc. we formulated a bear, bull and base case scenario on asset quality. The results of the scenario analysis pro- vide comfort on BVPS, RoE and indeed dividend sustainability across business outcomes. Our repayment and revenue accrual related analytics suggest that while cash flows from borrowers did weaken in FY15.

SHAREHOLDING PATTERN

MARGIN LIKE TO GET SQUEEZED, ROE COULD DECLINE

With RBI’s notification to banks allowing them to raise long term bonds for infrastructure project finance with zero regulatory costs, yields are likely to contract. This may intensify as balance sheets of players in the power ecosystem improve from either equity infu- sions or operations. The resulting margin squeeze (limited borrow- ing cost play barring policy rate cuts) and enhanced credit costs will drive a likely ~300bps compression in RoE.

RESULTS (Quarterly )(Rs CR.)

 

DEC' 14

SEP' 14

JUN' 14

MAR 14

DEC' 13

Sales

6,434.65

6,304.70

5,918.39

5,632.36

5,539.23

Operat- ing profit

6,356.63

6,246.86

5,865.69

5,546.73

5,500.31

Interest

4,205.94

4,228.22

3,865.70

3,557.59

3,452.26

Gross profit

2,154.39

2,022.99

2,005.50

1,992.87

2,056.13

TECHNICAL VIEW

PFC LTD is looking weak on charts. We advise to sell around 275-280 with stoploss of 290 for the targets of 265-255 levels. RSI is also showing downside momentum in it on daily charts.

SYMBOL

VALUE

ACTION

RSI(14)

18.327

OVERSOLD

STOCH(9,6)

30.508

SELL

STOCHRSI(14)

0.000

OVER SOLD

MACD(12,26)

-4.180

SELL

ADX(14)

41.201

SELL

WILLIAMS %R

-95.157

OVERSOLD

CCI(14)

-165.0759

SELL

ATR(14)

2.6143

HIGH VOLATILITY

HIGH/LOWS(14)

-108000

SELL

ULTIMATE OSCILLATOR

28.055

OVERSOLD

ROC

-5.875

SELL

BULL/BEAR POWER()13

-16.1480

SELL

BUY: 0 SELL:7 NEUTRAL: 4

SUMMARY : STRONG SELL

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

VOLTAS

BUY

288.95

285-290

278

296-302

ONE WEEK

DLF

BUY

158.25

155-158

152

162-165

ONE WEEK

RECL

SELL

331.65

335-340

352

325-310

ONE WEEK

LIC HOUSING

SELL

449.5

445-442

452

435-420

ONE WEEK

BATA INDIA

SELL

1164.2

1180-200

1230

1150-120

ONE WEEK

Performance of Previous Week

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE/LOW/HIGH

SUN PHARMA

250

BUY

1020-1040

995

1065-1080

-1750.00

NEAR COST

1013.85/ 1058.55

RANBAXY

500

BUY

790-800

778

820-840

15000.00

FIRST TGT HIT

795.80 / 830.70

AUROPHARMA

250

BUY

1080-1095

1060

1120-1145

16250.00

BOTH TGT HIT

1151.95 / 1184.80

RELINFRA

500

BUY

490-495

478

510-525

-6000.00

SL TRG

463.80 / 497.80

COAL INDIA

1000

SELL

370-375

385

360-350

10000.00

FIRST TGT HIT

366.70 / 358.40

HINDALCO

2000

SELL

150-152

155

147-142

36000.00

BOTH TGT HIT

 

NET PROFIT

 

 

 

 

 

69500.00

 

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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