REC, PFC Trade 47% Below Graham Number at Single-Digit P/E

REC, PFC trade 47% below Graham Number at single-digit P/E. FairStock's value screen shows [REC Ltd](/stock/RECLTD) (NSE: RECLTD) closing at ₹335 against a Graham Number of ₹662. [Power Finance Corporation](/stock/PFC) (NSE: PFC) closed at ₹376 against ₹783. That's a 47.2% blended margin of safety. Both carry P/E ratios below 6 and FairStock Scores above 75. The screen says cheap. The public filings say why. The two aren't independent bets. PFC controls REC. Holding both means double exposure to the same power finance loan book, not two uncorrelated value trades. That structure matters more than the discount headline. At current prices, REC sits at about half its Graham Number. PFC sits a bit lower. The screen isn't wrong, but it's measuring book value, not credit cycles. Why the Discount Persists The market isn't pricing these names as broken. It's pricing them as rate-sensitive, wholesale-funded lenders with concentrated state utility exposure. Sub-6 P/E on FY25 earnings implies earnings yields above 16%. At a 5.5 P/E, the earnings yield is near 18%. That's the attraction. But P/E alone misses the balance sheet. Public filings show high exposure to state discoms, whose payment cycles have improved but still swing with tariff orders and subsidy flows. If one large borrower delays, provisions move. The Graham Number formula anchors on EPS and book value. The ₹662 and ₹783 figures rest on the assumption that book value is clean. That assumption needs testing. FairStock's composite scores above 75 absorb some of that. The screen balances value and quality signals. It sees enough earnings stability to keep both names in the top band of the Graham screen. That doesn't make the credit risk disappear. Sector Impact: Power Finance Multiples Re-rate on Yields This discount isn't isolated. Power finance names often trade at low P/E because wholesale borrowing costs set their net interest margins. When bond yields fall, their cost of funds falls faster than lending yie...