PFC January-March Profit Beats Estimates On Robust Net Interest Income

Power Finance Corp. Ltd. beat Street expectations with a strong March quarter, driven by a surge in net interest income and moderate rise in finance costs. However, a surprise impairment charge dented part of the bottom line.

The state-owned NBFC reported a net profit of ₹51.09 billion for the quarter, up nearly 24% on year and well above the ₹45.13-billion consensus estimate of four brokerages. Net interest income soared 40% on year to ₹59.10 billion, also beating the average forecast of ₹47.97 billion.

Interest income rose 19% to over ₹137 billion, while finance costs were contained, rising only 7.6% on year to ₹78.11 billion. Total revenue from operations rose 22% to ₹149.39 billion, helped by stronger interest income and a 66% jump in dividend income, which added more than ₹4.5 billion to the quarter's revenue.

Despite strong operational performance, provisions for impairment surged to ₹4.45 billion from ₹743 million a quarter ago, reversing expectations of a write-back. Total expenses excluding finance costs rose sharply, pushing total expenditure up 22.3% on year to ₹88.42 billion.

Asset quality improved notably. Gross stage-III assets fell to 1.94% as of March 31 from 2.68% a quarter ago and 3.34% a year ago. Net stage-III assets also improved to 0.39% from 0.71% in December and 0.85% a year earlier. All stressed assets were in the private sector loan book, with provisioning on these assets increasing to 80% from 73% in the previous quarter.

Loan disbursements jumped nearly 40% on year to ₹679.68 billion in the quarter. Disbursements to the private sector surged 59% to ₹164.18 billion, while those to the government sector rose 35% to ₹515.49 billion, comprising 76% of total disbursements.

Assets under management rose 12.8% on year to ₹5.43 trillion, above the top end of Street estimates. Of the ₹105.17 billion in stage-III loans, about 78% are under resolution at the National Company Law Tribunal.

For 2024-25, net profit rose over 20% on year to ₹173.52 billion, and total revenue from operations grew 15.4% to nearly ₹531 billion.
The board recommended a final dividend of ₹2.05 per share for the year.