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Informist, Wednesday, Feb. 4, 2026

 

By Shweta

 

MUMBAI – State-owned Power Finance Corp. Ltd. is expected to report a single-digit on-year rise in its bottom line for the December quarter despite a double-digit increase in its net interest income, according to brokerages tracking the company. The small rise in the net profit is possibly due to an increase in provisions.

 

The lender is expected to post a net profit of INR 44.91 billion, up more than 8% on year and nearly 1% on quarter, according to the average of estimates from five brokerages. Estimates for the company's net profit range from a high of INR 47.33 billion from Motilal Oswal Financial Services Ltd. to a low of INR 42.43 billion from Elara Securities (India) Ltd.

 

Two estimates differ on the provisions the lender will have to make for the December quarter. Motilal Oswal Financial Service Ltd. expects a provision write-back of INR 2.5 billion but expect the profit to come in at INR 47.33 billion.

 

"The resolution of Sinnar Thermal project in NCLT (National Company Law Tribunal) during the quarter could (potentially) result in provision write-backs for both PFC and REC in 3Q/4QFY26," Motilal Oswal said. In the year-ago quarter, the company's provisions totalled INR 745 million. In the trailing quarter, the state-owned company had made a provision of INR 2.42 billion.

 

ICICI Securities, on other hand, expects the company to make bad loan provisions of INR 4.88 billion for the December quarter. ICICI Securities estimates the bottom line at INR 42.72 billion for the reporting quarter despite the large provision.

 

The other three brokerages did not provide an estimate for the provisions they expect the state-owned company to make. The average of the estimates of the remaining three brokerages estimates the lender's net profit at INR 44.83 billion, almost the same as the average of the five estimates. These three brokerages are Mirae Asset Sharekhan Ltd., Elara Securities, and Emkay Global Financial Services Ltd. 

 

The company's net interest income for the December quarter is estimated at INR 54.32 billion, up nearly 16% on year and over 2% on quarter, according to the average of estimates from the five brokerages. The highest estimate for the financier's net interest income is INR 57.03 billion from Elara Securities and the lowest estimate is INR 53.35 billion from Emkay Global.

 

The on-year rise in the December quarter net interest income is likely due to the 13% on-year growth in the lender's loan book, as per estimates by two brokerages. "For PFC, we expect disbursements to grow 13% YoY (year-on-year), leading to loan book growth of ~13% YoY/1% QoQ (quarter-on-quarter)," Motilal Oswal said in a pre-earnings note.

 

The company's assets under management are estimated to grow 14% year-on-year and 2% sequentially to INR 5.8 trillion for the December quarter, according to ICICI Securities. "Forex translation loss is likely to be a tad higher for PFC due to currency fluctuations and ~5% of unhedged exposure," ICICI Securities said.

 

The company's net interest margin for the reporting quarter is estimated at 4% by Elara and 3.7% by Motilal Oswal. The company's credit cost is likely to improve to 0.1%, from 0.2% sequentially, for the December quarter, while it will remain unchanged on year. "Credit cost is expected (to be) benign," according to Mirae Asset.

 

Wednesday, shares of Power Finance Corp. ended at INR 414.60 apiece on the National Stock Exchange, up nearly 6%. The stock is up 9% since the company announced its September quarter earnings. The lender will disclose its December quarter earnings Thursday.

 

All four brokerage reports on the company available with Informist have a 'buy' or equivalent recommendations on the stock at an average target price of INR 499. This is nearly 20% higher than the current market price.

 

Following are the December quarter earnings estimates for Power Finance Corp. from five brokerages in descending order of the estimates of net profit in INR billion:

 

Brokerages	Net Interest Income	Net Profit
Motilal Oswal Financial Services Ltd.	53.61	47.33
Mirae Asset Sharekhan Ltd.	53.37	47.18
Emkay Global Financial Services Ltd.	53.35	44.89
ICICI Securities Ltd.	54.22	42.72
Elara Securities (India) Pvt. Ltd.	57.03	42.43
Average	54.32	44.91

 

End

 

Edited by Akul Nishant Akhoury

 

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