Power Finance Corporation surges 5% on heavy volumes; hits over 5-year high

In past six months, the stock has zoomed 51 per cent, as against 8 per cent gain in the S&P BSE Sensex.

Shares of Power Finance Corporation (PFC) hit an over five-year high at Rs 157.80 as they surged 5 per cent on the National Stock Exchange (NSE) in Tuesday’s intra-day trade amid heavy volumes. The stock of state-owned financial institution was trading at its highest level since May 2017.

The average trading volumes at the counter jumped over 15-fold today. Till 10:29 AM; a combined 20.23 million equity shares representing nearly 1 per cent of total equity of PFC had changed hands on the NSE and BSE, data shows. In comparison, the S&P BSE Sensex was up 0.10 per cent at 61,228.

In past one week, PFC has rallied 15 per cent, as compared to 0.58 per cent rise in the Sensex. While, in past six months, the stock has zoomed 51 per cent, as against 8 per cent gain in the benchmark index.

PFC is a “MAHARATNA” CPSE under the administrative control of Ministry of Power, Government of India and a notified public financial institution under the provisions of the Companies Act, 2013 as also a systemically important non-deposit taking Non-Banking Financial Company (NBFC) classified as an Infrastructure Finance Company by the Reserve Bank of India.

The company is presently engaged in providing financial assistance to power utilities for meeting financing and development requirements of the power sector. In order to leverage potential synergies of emerging opportunities in the changed business environment and to facilitate providing financial assistance to infrastructure sector for meeting its financing and development requirements.

On December 15, 2022, PFC said that, being the holding company of REC, the company has signed an Memorandum of Understanding (MoU) to set internal targets/parameters for the financial year 2022-23 of REC (PFCs subsidiary company) on November 29, as per Department of Public Enterprises (DPE) performance evaluation systems for CPSEs.

Meanwhile, PFC continues to be a strategically important entity for the government as it is the nodal agency for various GoI schemes, such as the Liquidity Infusion Scheme (LIS), which is a part of the Aatmanirbhar Bharat Abhiyan, Revamped Distribution Sector Scheme (RDSS), and Ultra Mega Power Project (UMPP) scheme.

Additionally, the Ministry of Power (MoP) has initiated a tariff-based competitive bidding process for the development and strengthening of the transmission system through private sector participation. PFC Consulting Limited (PFCCL), a wholly-owned subsidiary of PFC, has been nominated as Bid Process Coordinator by the MoP, GoI for the development of independent transmission projects.

As a part of its liquidity relief package, the GoI announced Rs 90,000 crore liquidity injection to state distribution companies (discoms) in the form of state government-guaranteed loans, through PFC and REC Limited (REC), to clear outstanding dues of power generation and transmission companies. This was later enhanced to Rs 1.25 trillion. Till February 2022, PFC and REC have together disbursed around Rs 1.04 trillion, CARE Ratings said in June 2022, rating rationale.

The rating agency reaffirmed the ratings for various instruments of PFC. The ratings take in to consideration improving profitability and capitalisation profiles, improving asset quality indicators, albeit exposure remains towards weak state power utilities (SPU) and private sector companies, CARE Ratings had said.

Technical View

Bias: Positive

Target: Rs 170

Support: Rs 148; Rs 145

The share price of Power Finance Corporation has witnessed a steep rally of nearly 55 per cent in the last 12 trading weeks - from levels of Rs 102 to the multi-year high.

The stock is trading with a positive bias on the daily, weekly and monthly charts. The overall bias indicates likelihood of the uptrend continuing in the near future. 

The stock has also given buy signal on the monthly Fibonnaci chart, with bulls likely favouing the stock as long as it holds above Rs 145 to Rs 148 support zone.
 

As per the quarterly Fibonacci chart, the next upside targets are likely to be Rs 164 and Rs 170. 
 

(With inputs from Rex Cano)