Highest ever quarterly NP, Q1 loan sanctions zoom 76%, and still Cheapest NBFC

POWER FINANCE CORPN:

Excellent Q1 nos:
NII grows 5% vs CNBC est of 7% degrowth

NP 1712 cr all time high qrtrly 21.85% up vs Bloomberg est 1405cr

NP up 36% QoQ

NP up 17% vs CNBC est

NP up  9% YoY


Q1 STRONG POSITIVES:

New sanctions increase whopping 76% to 34613 cr vs 19638

CAR 21.10%

Return on Net-worth 21%

Cost of Funds down to 8.46% vs 8.72%

Yield on Assets 11.94%

Tdg @ 0.87xBookValue

Annualised Eps 51.89

Tdg @ PERatio 4.30 only

52 week high 257
Stock to flare up as Bonus issue record date (29th) nearing
denofwealth hopeful that stock should bounce to 250  August expiry.                
POWER FINANCE CORPN:

BUY : Tgt Rs 250:Axis Direct

PAT above estimates, sanctions rise
Power Finance Corporation (PFC) reported profit of Rs 17 bn in Q1
(up 9% YoY) – above our estimate – aided by higher NII and
significantly lower-than-expected provisions (down 70% QoQ despite
135 bps improvement in coverage ratio). Asset quality was stable –
absolute GNPA stagnated at ~Rs 75 bn though headline GNPA ratio
optically slipped 20 bps down due to a consolidating loan book
(down 5% QoQ).
Although disbursements were flat YoY at Rs 77 bn, sanctions were up
76% YoY to Rs 346 bn, alleviating some concern on future growth after
conversion of discom debt into cash under the UDAY scheme.
Outstanding sanctions at Rs 1.55 tn (3.5x avg annual disbursements).

Our take: Record date for Bonus shares 29th August. Stock should rise sharply . 96% equity with Govt/DIIs/FIIs. Only 4% with public. We estimate PFC to be 150 ex-bonus ) in 2-3months