POWER FINANCE CORPORATION LTD - Quantamental Equity Research Report

Quantamental Equity Research on POWER FINANCE CORPORATION LTD | Release: 04 Dec 2018 18:13:02 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:PFC and BSE CODE:532810
Last Close:  INR 97.15
Fair Value:  INR 107.95
Est. Price by Mar 19:  INR 108.45
Market Capitalization (INR Crs):  25648.39
Industry:  Finance (including NBFCs)
Rating:  BUY
Upside:  12%
Company Profile
PFC is the most preferred financial Institution Providing affordable and competitive Product and service with efficient and internationally integraded sourcing and servicing, partnering the reformes in indian power sector and enhacing value to its stakeholders.
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % -2% 25% 69%  
EBIT % 19% 7% 50%  
Earnings % 175% -2% 32%  
Book Value %  9% 24% 69%  
Stock Total Return %  -44% -37% -9%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 65.64  
(B) FII/FPI 12.10  
(C) DII/Insurance Companies 14.83  
(D) Public holding < 2 lakhs of cap. 4.54  
(E) Others 2.89  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 134 122 92 96 95 138 86 156 87 108 116 123 130 138  
Return on Equity 17% 17% 15% 19% 20% 18% 17% 6% 15% 13% 13% 13% 12% 12%  
Price to Earning  6.5 5.3 4.0 2.9 2.3 3.1 1.9 19.4 3.9 5.0 5.0 5.0 5.0 5.0  
EVTI 10.2 9.8 9.4 8.8 8.0 8.2 7.6 8.9 9.4 9.5 9.4 9.4 9.3 9.3  
EVTIFM 6.5 5.3 4.0 2.9 2.3 3.1 1.9 19.4 3.9 5.0 5.0 5.0 5.0 5.0  
Price to Book Value 1.1 0.9 0.6 0.5 0.5 0.6 0.3 1.1 0.6 0.7 0.6 0.6 0.6 0.6  
Debt to Equity  4.8 5.6 5.3 5.9 5.8 5.8 5.6 5.6 5.8 5.6 5.3 5.2 5.0 4.8  
Dividend Yield 3% 4% 6% 7% 10% 7% 16% 3% 9% 7% 7% 7% 7% 7%  
Cash Flow to Firm -10% -8% -13% -8% 0% -3% 7% 11% -1% 6% 6% 6% 6% 7%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales     26,566.26     28,128.37     29,720.46     31,337.26     32,973.07     34,621.72  
EBITDA     25,538.24     25,886.54     27,351.73     28,839.68     30,345.12     31,862.37  
EBIT     25,531.83     25,879.76     27,345.66     28,834.24     30,340.24     31,858.01  
PBT       8,326.95       8,674.88       9,238.91       9,820.79     10,419.86     11,035.27  
NPAT       5,855.22       5,726.29       6,098.61       6,482.70       6,878.15       7,284.38  
Price to Earning               3.92              5.00              5.00              5.00              5.00              5.00  
Price to Book Value              0.58              0.66              0.64              0.63              0.61              0.60  
Debt to Equity               5.76              5.55              5.35              5.15              4.96              4.78  
Return on Equity              0.15              0.13              0.13              0.13              0.12              0.12  
Enterprise Value to Total Income (EVTI)              9.36              9.46              9.42              9.38              9.34              9.30  
Enterprise Value to Total Income to Firm Margin(EVTIFM)            14.07            15.84            15.77            15.70            15.63            15.56  
Price or Est. Share Prices            86.94          108.45          115.55          122.85          130.35          138.05  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT       8,674.88       9,238.91       9,820.79     10,419.86     11,035.27  
Interest     17,204.88     18,106.75     19,013.45     19,920.39     20,822.74  
Depreciation              6.79              6.08              5.44              4.87              4.36  
Cash Flow Before Tax     25,886.54     27,351.73     28,839.68     30,345.12     31,862.37  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax     17,087.71     18,054.88     19,037.07     20,030.81     21,032.35  
Terminal Cash Flow                                                                                      -    3,51,596.56  
Total Cash Flow     17,087.71     18,054.88     19,037.07     20,030.81  3,72,628.91  
Present Value of Cash Flow  3,18,209.00  
Debt  2,89,714.47  
Value of Equity     28,494.53  
Fair Value Per Share          107.95  
Equity          25,648
Debt       2,29,538
Beta Take from Reuters 2.5
Risk Free Rate Prevailing Yield in India 8%
Market Risk Premium Assuming 8.82% premium for Equity Investments 9%
Interest Paid          17,205
Tax Benefit            5,107
Interest Net of Tax          12,098
Debt       2,29,538
Cost of Debt 5%
Cost of Equity 30%
Debt Weight 90%
Equity Weight 10%
WACC 8%
Cash Flow of Mar-23 E     21,032.35
Growth 1.3%
Present Value of Terminal Cashflow  3,51,596.56
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  Power Fin.Corpn.             97.15          25,648          144.97            17.02            10.04              8.51            12.98              0.67              4.87              5.76              8.03            11.04          164.53          29,651            65.64                 19              6.30              8.16             -1.32            10.54
   2  REC Ltd           105.65          20,865          179.71            21.06              9.51              8.52            14.32              0.59              4.33              5.60              8.66            12.87          854.95          25,276            57.99                 23              1.89              1.99            75.94            36.50
   3  Tour. Fin. Corp.           126.35            1,020            86.09            12.51            11.61              9.27            13.85              1.47            14.51              2.09              1.58              9.83         -487.53               206              8.87                 66           -11.11             -1.12           -22.68             -7.93
   4  Guj. State Fin.               1.56                 14         -253.96              6.33                  -              23.16              3.55                  -                    -               -0.30                  -                6.33           -12.34                 24            83.95                  -0         -171.43         -115.54             -5.35             -7.65
   5  IFCI             13.70            2,324            34.08           -32.14              0.95              5.53           -55.70              0.40                  -                3.99                  -             -32.14           -56.38            2,693            56.42                  -6           -12.62           -28.75           -39.86         -223.00
   6                                                                  -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -                    -  

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