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Motilal Oswal Report
Power Finance Corporation Ltd. (standalone) trades at 1x FY26E price/book value and five times FY26 price/equity, and we believe that the risk-reward is attractive considering good visibility on loan growth, earnings growth, stressed asset resolutions, and healthy return ratios.
We reiterate our Buy rating with an SoTP (Sep'26E)-based target price of Rs 560 (based on 1.2 times target multiple for the Power Finance standalone business and Rs 211/ share for Power Finance's stake in REC after a hold-co discount of 20%).
Key risks:
rise in exposure to private infrastructure projects as these loans fall outside Power Finance's core expertise of lending to power projects;
increase in exposure to power projects without power purchase agreements,
compression in spreads and margins due to aggressive competitive landscape.
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