Power Fin.Corpn. (PFC)

FairStock Score: 77/100 — STEADY

Score breakdown: P/E: 3/3 · ROCE: 0/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• Strong profitability: ROE of 21.42% with P/E of 5.41 and P/B of 1.32 is a rare value-quality combination.
• Growth at a reasonable price: Sales growth of 14.22%, profit growth of 13.09%, and PEG of 0.60 indicate the market is not fully pricing the growth.
• Graham margin of safety: Graham Number of ₹783.23 against price of ₹469.80 implies roughly 47% downside protection.
• Quality and alignment: Piotroski F-Score of 7/9, promoter holding of 55.99%, and a dividend yield of 3.82% support patient holding.
• Recent momentum: Latest quarter net profit of ₹8,212 Cr on sales of ₹29,095 Cr shows strong current earnings power.

Concerns

• Very high leverage: Debt/Equity of 8.25 leaves little room for error if asset quality or funding costs deteriorate.
• Negative free cash flow of -₹94,581 Cr, though typical for a lender, means reliance on continuous wholesale funding.
• Altman Z-Score of 0.58, while not designed for financials, still signals caution for a highly levered balance sheet.
• EV/EBITDA of 868.33 is distorted for a finance company, so conventional valuation screens may mislead an unwary investor.

AI Analysis

At ₹469.80, PFC is priced at 5.41 times earnings and 1.32 times book, while earning 21.42% on equity. For a lender that has grown sales 14.22% and profit 13.09%, that is a Graham-style discount. The Graham Number of ₹783.23 gives me nearly 47% margin of safety. Piotroski score of 7 out of 9 supports the quality angle, and promoter holding at 55.99% aligns my interests with a stable majority owner. The moat is not wide, but it is real: a specialized power-sector lender with a durable presence in India’s infrastructure finance. But I must be honest about leverage. Debt-to-equity of 8.25 would frighten any industrial investor, yet it is the nature of a financing institution. The negative free cash flow of -₹94,581 Cr also looks alarming, but for a power-sector lender it largely reflects disbursements and advances rather than wasteful capex. Altman Z of 0.58 and EV/EBITDA of 868.33 are ratios designed for factories, not banks, so I will not give them much weight here. The real question at 8.25 times leverage is asset quality and cost of funds. With 55.99% promoter control and 3.82% dividend yield, patience is rewarded while I wait. At 5.41 times earnings with 13% profit growth, the PEG of 0.60 suggests the market is not paying enough for the franchise. I would add to a position slowly, keeping some powder dry for the inevitable bad-debt cycle. This looks like a sound, conservatively valued compounder, not a speculative story.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer