Power Finance Q2 Results Review - Healthy; Disbursements To Accelerate Further In H2: Motilal Oswal

Asset quality improves due to stressed asset resolution; net interest margin flat QoQ, says the brokerage.

Electricity transmission tower and cables against the backdrop of sunrise. (Photographer: Vishal Patel/ Source: NDTV Profit)  

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Motilal Oswal Report

Power Finance Corporation Ltd. (standalone) trades at 1x FY26E price/book value and five times FY26 price/equity, and we believe that the risk-reward is attractive considering good visibility on loan growth, earnings growth, stressed asset resolutions, and healthy return ratios.

We reiterate our Buy rating with an SoTP (Sep’26E)-based target price of Rs 560 (based on 1.2 times target multiple for the Power Finance standalone business and Rs 211/ share for Power Finance’s stake in REC after a hold-co discount of 20%).

Key risks:

  1. rise in exposure to private infrastructure projects as these loans fall outside Power Finance’s core expertise of lending to power projects;

  2. increase in exposure to power projects without power purchase agreements,

  3. compression in spreads and margins due to aggressive competitive landscape.

Click on the attachment to read the full report:

Motilal Oswal Power Finance Corp Q2FY25 Results Review.pdf
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Also Read: Tata Motors Q2 Results Review - Incremental Headwinds Emerge For JLR: Motilal Oswal

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