PFC Technical and Fundamental Analysis (Power Finance Corporation)

analysis, fundamental analysis, technical analysis

Analysis of Power Finance Corporation Limited (PFC)

Power Finance Corporation Limited (PFC) is a leading Indian government-owned financial institution that provides financial services to the power sector in India.

PFC’s primary objective is to support the development of the Indian power sector by providing financial assistance to various power projects in India, including thermal, hydro, nuclear, and renewable energy projects. PFC provides a range of financial products and services, such as project financing, debt refinancing, bridge financing, and equipment leasing, among others.

Technical Analysis of PFC

Chart 1.1
Chart 1.2

The above two images are weekly charts of PFC. Observing Chart 1.1, we can see formation of a Triangle Pattern which the prices have now broken out. 
In Chart 1.2 you will see that PFC is trading in a zone since 2014. In technical terms , when stock trades in a zone, its known as accumulation. After the phase of accumulation, stock market usually advances to new highs. Multiple confluences indicates further continuation of momentum in stock.

Chart 2

Recently PFC has broken its high of 153.75. (chart 2)From there the structure have changed to bullish. A short term swing trade can be initiated at CMP (158.15) with sl below 151 (Daily Closing basis). Our Short term target will be 188. Along with a good swing trade opportunity, I will also be intrested in long term accumulation of this stript.

Fundamental Analysis of PFC​

  • Book Value/ share = 364.67, while the current market price (CMP) is 168.40. The stock is trading significantly lower than the book value per share. When the Market Price is less than the book value, the Investors may view this as an opportunity to buy the stock at a discount.
  • PE = 3.08 while Sector PE = 4.76: As of now, the average PE ratio of the power sector is 4.76. With a lower PE ratio of 3.08, Investors may consider Power Finance Corporation Ltd. share prices undervalued relative to its peers in the PSU sector. We might see a potential future price appreciation as the stock approaches its fair value.
  • Dividend Yield = 7.13%, which is almost equal to FD returns: PFC’s dividend yield is 7.13%, which is relatively high compared to the average FD returns in India. Investors who buy PFC’s stock may receive a significant portion of their dividend investment. It’s important to note that dividend yields can fluctuate over time and are not guaranteed.
  • 3 Years Sales CAGR = 18.72% Over the past three years, PFC’s sales revenue has been growing at an annual rate of 18.72%.
  • 3 Years Net Profit CAGR = 22.14% This indicates that PFC has steadily grown its sales revenue and net profit over the past three years. The high CAGR figures suggest that PFC is a financially stable company that is able to generate consistent growth in its sales and profits over time.

Supporting Factors for Growth

India is one of the fastest-growing Economies, which in relation will also lead to an increase in power consumption.
The power sector plays the most crucial role in countries’ economic growth. Domestic demand of power is increasing day by day due to an increase in Businesses – because of Government’s initiatives like Make in India, and Rural Electrification. Government has taken action faster to supply electricity in every nook and corner of the country, Electric vehicles. These days preference of public is shifting from Petrol/Diesel vehicles to Electric Vehicles in all segments, Etc. These are some of reasons which will also lead to increase in Power demand in future.

With strong technicals and supporting Fundamentals, PFC is a must have in your long term portfolio. 

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Disclaimer: Stock targets and forecasts are for educational purposes only and may not be reliable for investment decisions. Use this information at your own risk. This is not an offer to buy or sell stocks. and its authors are not liable for any losses. It is not investment advice; seek professional advice before making any investment decisions. Exercise caution and be informed when investing.

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