From Rs 60 to Rs 580 in 5 years, This multibagger PSU to trade ex-dividend today; check targets

PFC shares dividend: Shares of Power Finance Corporation Ltd (PFC) shall trade ex-dividend today. The state-run power financier had announced the fourth interim dividend for their eligible shareholders of the company on March 12, 2025, fixing the record date as Wednesday, March 19, 2025 to determine the eligibility. The company also said that dividend shall be paid on or before April 11, 2025.

The company board considered and approved the declaration of fourth interim dividend of Rs 3.50 per equity shares on the face value of Rs 10 each for the FY 2024-25, said PFC in the exchange filing. "It is to inform that 19 March 2025 shall be reckoned as the record date for the purpose of ascertaining the eligibility of shareholders," it said, adding the date of payment/dispatch of the aforesaid interim dividend shall be on or before April 11, 2025.

Shares of Power Finance Corporation settled at Rs 402.65 on Tuesday, rising about 3.34 per cent for the day. The total market capitalization of the company stood close to Rs 1.25 lakh crore mark. The stock has surged nearly 450 per cent in the last five years, even after correcting 30 per cent from its 52-week high at Rs 580.35 hit in July 2024.

A paradigm shift, favouring renewables, is in the making in India’s power sector; and with it, shall emerge an Rs 43 lakh crore tide of capex towards generation and transmission (G&T) by 2032, as per CEA estimates. PFC, being a traditional power financier, commands 20 per cent market share in financing the power sector with REC as per the company estimate, said ICICI Securities.

"We see PFC at a vantage to ride this energy transition tide and reap the benefits of the changing market dynamics. We resume coverage on PFC with a 'buy' rating and a target price of Rs 550, valuing it at 1.3 times FY26E BV and applying 25 per cent holdco discount for REC stake," it added.

Shares of Power Finance Corporation surged about 870 per cent to Rs 580.35 in a span of five years from Rs 60-levels when the Covid-19 hit in March 2020. The stock has gained about 10 per cent in the last one year, while it is down 17 per cent in the last six months.

Unperturbed cross cyclical 14 per cent loan growth expectations on a high base, stable NIMs and increased visibility on NPA downcycle continue to feed into superior returns – 3 per cent RoAs and average 17 per cent RoEs in FY25E-27E, said Elara Capital.

"While the stock has witnessed valuation de-rating on underwhelming capex of FY25 and allied challenges, we are confident of strong fundamentals and power cycle uptrend. Reiterate BUY with unchanged core book multiple at 1.6 times FY27E P/ABV to arrive at SoTP- target of Rs 569," Elara added.

Power Finance Corporation reported a 23 per cent year-on-year (YoY) growth in its December 2024 quarter consolidated net profit at Rs 5,829 crore. The total revenue from operations in Q3FY25 stood at Rs 26,798 crore, up 14 per cent YoY. Its gross NPA stood at 2.68 per cent, while net NPAs came in at 0.71 per cent for the quarter.

PFC trades at 0.8 times FY27E P/BV and 4 times FY27 P/E, and that the risk-reward is attractive considering decent visibility on loan growth, earnings growth, stressed asset resolutions, and healthy return ratios, said Motilal Oswal. "We reiterate our 'buy' rating with an SoTP (Sep’26E)-based target price of Rs 475," it added.

Motilal Oswal cited rise in exposure to private infra projects as these loans fall outside PFC’s core expertise of lending to power projects; increase in exposure to power projects without PPAs, compression in spreads and margins due to competitive landscape, and a slowdown in the offtake of renewable energy projects, driven by weak power demand as the key risks.