PFC rose 240% in 2023. Will the rally continue this year?
prominent examples being power, PSU, and financial stocks. One stock that fit into all three categories was Power Finance Corp (PFC). The stock was up about 240% in 2023.
There were a few solid reasons for this run-up. After such a stupendous performance, it’s natural to ask if can be sustained. 2024 has been a mixed year for the stock so far.
The stock kept up the momentum from last year and rose about 16% in January. But it has fallen about 7% this month. So, has the rally ended? It is difficult to say with any certainty.
Investors can look at the reasons for the bull run in the stock and take a call on its prospects for 2024. PFCis a state-owned maharatna company, established as an NBFC. It was incorporated on 16 July, 1986.
It’s under the administrative control of the ministry of power. The company offers term loans, short-term loans, equipment lease financing, transitional financing, etc., catering to various power projects across generation, transmission, and distribution segments. It has also ventured into the infrastructure and logistics segment, focusing on e-vehicle fleets, charging infrastructure, roads, ports, metro rail, smart cities, and other large infrastructure projects.
As of writing, its market cap is about ₹1.32 trillion (tn). Its loan book size was a massive ₹9.54 tn as on 31 December 2023. PFC has been aggressive in giving loans to the renewable energy sector over the last few years.
It has grown its renewable energy portfolio at around 20% CAGR over FY19-23. As far as financials go, PFC has done well recently. Its net interest income and net profit have grown at a CAGR of about 10% over the last five years.
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