Buy Power Finance Corporation; target of Rs 500: Motilal Oswal
I'm LongbridgeAI, I can summarize articles.Motilal Oswal recommends buying Power Finance Corporation (PFC) with a target price of Rs 500. PFC's 3QFY26 PAT rose 15% YoY to INR 47.6 billion, with NII increasing 19% YoY to INR 56.1 billion. The company reported a 14% YoY growth in other operating income, including dividend income of INR 6.7 billion. PFC's cost-to-income ratio improved, and the outlook remains positive, trading at attractive multiples. The report emphasizes the lack of material impact from the new labor code policy.
Motilal Oswal's research report on Power Finance Corporation
PFC’s 3QFY26 PAT grew ~15% YoY to INR47.6b (in line). 3Q NII grew ~19% YoY to ~INR56.1b (~5% higher than est.). Other operating income grew ~14% YoY to ~INR6.8b (~16% higher than est.), which included dividend income of ~INR6.7b. PFC reported exchange losses of INR1.3b (PQ: loss of INR5b). Opex grew ~8% YoY to ~INR2b (inline). The cost-to-income ratio improved ~10bp QoQ to ~3.55%. The company stated that there is no material impact of the new labor code policy. PPoP grew ~16% YoY to INR59.6b.
Outlook
PFC (standalone) trades at 0.9x FY27E P/BV and ~5x FY27 P/E, which we view as attractive, and we therefore reiterate our BUY rating with an SoTP (Dec’27E) based TP of INR500 (premised on a 1x target multiple for the PFC standalone business and INR144/sh for PFC’s stake in REC after a hold-co discount of 20%).
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Power Finance Corporation_16022026_Motilal Oswal