Power Finance Corporation (PFC) shares surged 7.15% to ₹481.60 following the company’s impressive Q2 results, which revealed a 9% increase in net profit to ₹7,214.90 crores for the quarter ending September 30, 2024. This strong performance has led analysts to predict continued momentum for the stock, with potential upside estimates ranging from 16% to 28%.
Key Financial Highlights from PFC’s Q2 Results
On November 11, 2024, PFC reported significant financial growth:
- Net Profit: ₹7,214.90 crores, up from ₹6,628.17 crores in the same quarter last year.
- Total Income: Increased to ₹25,754.73 crores from ₹22,387.32 crores.
- Consolidated Profit After Tax (PAT): For the six-month period from April to September FY25, PAT rose by 14% to ₹14,397 crores compared to ₹12,610 crores in the same period last fiscal year.
- Loan Asset Portfolio Growth: Consolidated loan asset portfolio increased by 13%, moving from ₹9,23,724 crores as of September 30, 2023, to ₹10,39,472 crores at the end of September 2024.
Market Reaction and Stock Performance
PFC’s share price closed at ₹481.60, with an intraday high of ₹489.10 and a low of ₹452.05 during Monday’s trading session. The stock’s upward movement reflects investor confidence following the positive earnings report.
Technical Analysis Insights
Rajesh Bhosale, an Equity Technical and Derivative Analyst at Angel One, noted that the stock has triggered upward momentum after a period of consolidation around its 200-day simple moving average (SMA). He stated:“The move is likely to continue as we are seeing fresh long formations and a good increase in volume. Strong support is at ₹465 and any dip towards it is likely to get bought into; ₹510 is immediate resistance.”
Analyst Ratings and Target Prices
Following the release of PFC’s Q2 results, several brokerage firms have reaffirmed their bullish outlook on the stock:
- Bernstein: Maintains an ‘Outperform’ rating with a target price of ₹620, highlighting improvements in loan disbursements and asset quality.
- Motilal Oswal Financial Services: Reiterates a ‘BUY’ rating with a target price of ₹560, citing attractive risk-reward dynamics based on loan growth visibility and healthy return ratios.
- CLSA: Assigns an ‘Outperform’ rating with a target price of ₹610, noting that while loan growth remains slow at 10% YoY, new loan sanctions in conventional generation are promising.
Dividend Declaration
In addition to its strong financial performance, PFC declared a second interim dividend of ₹3.50 per share, with the record date set for November 25, 2024. This dividend reflects PFC’s commitment to returning value to shareholders.
Future Outlook for PFC Shares
Given the positive financial results and favorable analyst ratings, investors may consider buying PFC shares as part of their portfolio strategy. The company’s focus on improving asset quality and increasing loan disbursements positions it well for future growth.
Potential Risks
While PFC shows strong fundamentals, investors should also be aware of potential risks:
- Economic Factors: Changes in economic conditions could impact loan demand and repayment rates.
- Regulatory Challenges: Being a public sector entity, PFC may face regulatory hurdles that could affect its operations.
- Market Volatility: Stock prices can be volatile based on market sentiment and external economic factors.
Conclusion: Is Now the Right Time to Invest in PFC?
With robust quarterly results and positive momentum in share price performance, now may be an opportune time for investors to consider adding PFC shares to their portfolios. The combination of strong fundamentals, favorable analyst ratings, and dividend declarations makes it an attractive option in the current market landscape.
