PFC shares jump the most in five months after analysts project upsides up to 50%

All ten analysts who have coverage on state-run Power Finance Corporation (PFC) Ltd. have maintained their "buy" recommendation on the stock, expecting it to test levels as high as ₹680.

PFC shares have corrected 22% from its recent highs of ₹580, while the recent highest price target implies a potential upside of 51% from Friday's closing levels.

For the September quarter, PFC's disbursals increased by 45% from last year to ₹47,633 crore. On a sequential basis, disbursals had more than doubled.

PFC's Assets Under Management (AUM) grew by 9.8% from last year to ₹4.93 lakh crore.

Asset quality for the quarter improved significantly on a sequential basis. Gross NPA stood at 2.71% from 3.38% in June, while Net NPA stood at 0.72% from 0.87% in June.

Brokerage firm CLSA has an "outperform" rating with a price target of ₹610. The brokerage said that loan growth for PFC was slow despite healthy recovery in disbursals as a larger chunk of repayments were scheduled for the first half of the current financial year.

PFC's board also decided against a loan for the Shapoorji Pallonji Group and around 96% of PFC's infra sanctions are for government entities. A key positive, according to CLSA is PFC starting sanctions in conventional generation segment.

For an 18% Return on Equity (RoE) profile, CLSA called PFC's valuations of 1.1 times financial year 2026 adjusted price-to-book as "inexpensive."

Bernstein also retained its "outperform" rating on the stock with a price target of ₹620. Guidance for the full year as been retained, while asset quality continues to improve.

UBS has the second highest price target on PFC at ₹670, which comes along with a "buy" recommendation.

Credit cycle continues to remain benign for PFC and write-back from legacy assets kept overall credit costs negative in the September quarter, according to UBS.

DAM Capital has the highest price target on PFC, at ₹680.

Shares of PFC are currently trading 8.1% higher at ₹485.9. The stock is now up 23% so far in 2024. This is the biggest single-day jump seen by the stock since June 3, which was a day before the Lok Sabha Election results were declared.