Power Finance Corporation - Outperformer - CSEC Research

Translation gains lead growth, NII healthy

Power Finance Corporation's (PFC's) revenues and operating profit were along expected lines. PAT was up 68.2%YoY at Rs 11.08bn a record high in its history. Net interest income along with foreign currency translation gains augured well for earnings growth.

Quarterly Highlights

- Topline and operating profit along expected lines
- Uptick in business
- Disbursements up 35.8%YoY
- Credit growth at 30.7%YoY
- Spreads trend lower to 2.2%
- NII growth at 18.5%YoY
- Translation gains to tune of Rs 4.15bn provide the surge in PAT
- Net slippages to the tune of Rs 4bn
- Asset quality healthy, net NPLs at 0.4%

Valuation

At current levels the stock trades at 1.3X its FY13E adjusted book value and 6.39X its FY13E EPS (standalone). PFC, with its niche focus is less susceptible to volatile earnings unlike other players in the financial space. Traction in balance sheet and earnings are amongst the standout qualities as compared to other players in the financials space. We rate the stock an OUTPERFORMER with a target price of Rs 252. Key risks to our recommendation include a slower than expected loan book growth and greater than expected delinquencies.

Source : Equity Bulls

Keywords