Power Finance Corporation Limited

Financial Services — Credit Services · NSE

₹333.25−₹9.05 (−2.64%)

DalalBaazaar Score

82 / 100

🟢 Strong

Verdict

ATTRACTIVE

Risk

Low

Driven by negative free cash flow.

In simple words: Strong business and financial position, with modest growth. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Power Finance Corporation Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Power Finance Corporation Limited, a non-banking finance company, provides financial products and related advisory services to the power, logistics, and infrastructure sectors in India.

IndustryCredit Services

SectorFinancial Services

Employees552

Annual revenue₹43,200 Cr

How does it make money?

Turns over ₹43,200 Cr a year. Of every ₹100 of sales, about ₹60 reaches shareholders as profit, with ₹260 left at the operating level before interest, tax and depreciation. Each of its 552 employees supports ₹78.26 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹78.26 Cr

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

12 analysts covering the stock expect revenue to grow about 9.8% and earnings to grow about 5.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+9.8%

Est. earnings growth+5.6%

Analysts12

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +57% while net margin moved +4% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+57%

Margin effect+4%

DalalBaazaar Score

82/ 100

Strong

Weighted across six categories. Every point is explained below.

✓ Beta of 0.63 — historically steadier than the index
✓ Large-cap: deep liquidity and broad analyst coverage
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

83/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

83/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

4.2x

3Y Median

6.8x

40 monthly readings · mean 6.8x · range 4.1x–11.6x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 38% below its 3y median of 6.8x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 75% below the peer median of 17.0x.

vs. its own history

Cheap

6.8x median over 40 months · -38%

vs. sector peers

Cheap

17.0x median of 4 peers · -75%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

10.0x

PEG

0.24

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 2 high

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.6x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 7.4 points, from 267.7% to 260.2%.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 38% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 75% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 267.7% to 260.2%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 12% a year✓ 16.2% CAGR
Latest reported year was 0.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 258%✓ 260.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 17%✓ 19.5%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Interest cover stays above 3x✗ 1.6x
How much operating profit can fall before interest stops being comfortably covered.
5Valuation vs its own median of 6.8x✓ 4.2x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

8 / 11 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 3 neutral · 2 weak

Market Cap

₹1.10 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

4.2x

Cheap

Cheap against the generic band

P/B Ratio

0.77x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹78.93

Profitable

Profitable on a per-share basis

ROE

19.5%

Strong

Strong capital efficiency

ROCE

Not meaningful

N/A for lenders

Banks and NBFCs don't report capital employed the way other businesses do

Debt/Equity

5.37x

High

High leverage

Revenue Growth (YoY)

0.8%

Modest

Modest growth

Profit Growth (YoY)

2.1%

Modest

Slow profit growth

Dividend Yield

4.68%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

-₹4,842 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

3.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

85.5%

Good

Healthy core-business profitability

Net Margin

54.5%

Good

Strong bottom-line conversion

Current Ratio

36.78

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.63

Defensive

Steadier than the market

52W Range Position

11%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

333.8 / 351.9

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

46.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹27,517 Cr	₹33,566 Cr	₹41,678 Cr	₹43,200 Cr	+16.2%
EBITDA	₹73,651 Cr	₹91,445 Cr	₹1.03 L Cr	₹1.12 L Cr	+15.1%
EBITDA Margin	267.7%	272.4%	246.7%	260.2%	—
PAT (Net Profit)	₹15,889 Cr	₹19,761 Cr	₹22,991 Cr	₹25,901 Cr	+17.7%
EPS	₹48.15	₹59.88	₹69.67	₹78.49	+17.7%
ROE	18.9%	19.5%	19.5%	19.5%	—
Total Debt	₹7.81 L Cr	₹8.92 L Cr	₹10.01 L Cr	₹10.13 L Cr	+9.1%
Free Cash Flow	-₹74,840 Cr	-₹98,144 Cr	-₹93,110 Cr	-₹4,842 Cr	—

🟢 Revenue has grown at 16.2% a year over 3 years.

🟢 EBITDA has grown at 15.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 267.7% to 260.2% over 3 years (-7.4 pts).

🟢 PAT (Net Profit) has grown at 17.7% a year over 3 years.

🟢 EPS has grown at 17.7% a year over 3 years.

🟡 ROE has held roughly flat at 19.5% over 3 years.

🔴 Total Debt has grown at 9.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹12.45 L Cr

Total Liabilities

₹10.71 L Cr

Cash & Equivalents

₹2,737 Cr

Operating Cash Flow

-₹4,505 Cr

Capex

-₹337 Cr

Shareholding (proxy)

Institutional Holding

25.7%

Insider Holding

56.0%

Corporate Actions

Next Earnings

06 Nov 2026

Dividend Rate

₹15.6

Ex-Dividend Date

27 Aug 2026

Analyst Consensus

Recommendations

12 Buy · 2 Hold · 0 Sell

Target Price (Mean)

₹464.64

+39.4% vs CMP

Target Range

₹380 – ₹520

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

1 positive1 mixed4 general

PFC shareholders approve FY26 financials, dividend; board appointments cleared

scanx.trade, 18 OctCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Vedanta, PFC to LIC Housing: THESE 5 Stocks Look Surprisingly Cheap on Valuation | Full List

Goodreturns, 15 Oct

PFC Share Price Live: Key Price Action and Fundamentals

Univest, 16 Oct

Reliance Power share price drops 1.05% as ED's seizure order of about Rs 2027 crore hits sentiment

India Infoline, 14 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Buy Power Finance Corporation; target of Rs 520: ICICI Securities

Moneycontrol.com, 11 Aug

Power Finance Corporation Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 Aug

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Valuation · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 2 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Interest cover stays above 3x · see Key things to watch ↑