[T.S.R:17387] PFC-Earnings Downgrades Begin

Power Finance Corpn-Earnings Downgrades spoil the pitch 

PFC recently raised Rs 34.3bn via FPO of 172.2m shares at  Rs 203/share. We reduce our FY12e and FY13e PAT by ~7% and ~8% respectively as we lower our FY11-13e loan CAGR to 22% from 25%.  

n       PFC raises `34.3bn via an FPO of 172.2m shares at `203/share (15% dilution). Capital infusion is likely to support the tier-1 capital requirement for loan growth over FY11-13e.

 

n       We lower loan CAGR; margin to be stable. Delay in power projects due to environmental clearance and supply-linkage issues, and higher interest rates is likely to result in slower loan offtake by power companies. We reduce our FY11-13e loan CAGR to 22% from 25%. High capital base due to FPO, ECB, issuance of tax-free infra bonds and repricing of loans worth `81bn vs. liabilities of `89bn in FY12 are likely to support FY11-13e NIM.

 

n       Profitability still healthy; But Risks Are Rising: We expect RoE to remain at ~17% over FY11-13e after factoring in lower loan growth, 20bps contraction in spread and dilution via FPO.

 

Risks: Slowdown in the power sector; regulatory changes.
 

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

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