CLSA ON PFC

Downgrade from Underperform to SELL;  cut target to Rs 155 from Rs 190

Profit fell by 19% YoY due to higher credit costs and weaker topline

Management sees potential for upgrades from restructured loans at 14%

Loan growth will stay weak as UDAY scheme is fully implemented

Slower rollout of UDAY can drive upside to 'reported' earnings

Investment in Tier II PSU banks' bonds dilutes capital allocation standards

RBI's offering of differentiated bank licence to long-term financiers will need to be watched out.