Capitaline

Results 29-May-23

Analysis

Power Finance Corporation

Loan growth accelerates to 13%, asset quality improving

Power Finance Corporation has reported 34% growth in the net profit to Rs 3492.27 crore in the quarter ended March 2023 (Q4FY2023). Net Interest Income (NII) of the company rose 3% to Rs 3477 crore, while the company has continued to improve asset quality in Q4FY2023. The company has showed slight moderation in Net Interest Margin (NIM) to 3.36% in Q4FY2023 from 3.45% in the preceding last quarter. The interest spreads of the company eased to 2.53% in Q4FY2023 from 2.60% in the preceding quarter and 2.85% in the corresponding quarter last year.

Quarterly performance

The company has posted 7% increase in Income from operations at Rs 9566.20 crore in the quarter ended March 2023. Other income dipped 34% to Rs 620.03 crore. Total income rose 3% to Rs 10186.23 crore in the quarter ended March 2023. The interest expenses increased 10% to Rs 6140.71 crore.

The employee expenses declined 5% to Rs 53.03 crore, while the other expenditures also fell 71% to Rs 200.30 crore in the quarter ended March 2023.

The ensuing Gross Profit stood at Rs 3792.19 crore in the quarter ended March 2023, showing an increase of 7% on yoy basis.

The depreciation during the quarter under review stood at Rs 5.18 crore up from Rs 2.85 crore in Q4FY2022. However, the company has written back provisions amounting to Rs 494.20 crore in Q4FY2023 against charge of Rs 351.75 crore in Q4FY2022, leading to 34% surge in the Profit before Tax to Rs 4281.21 crore in the quarter ended March 2023.

An effective tax rate was steady at 18.4% in Q4FY2023 compared with 18.5% in Q4FY2022. PAT increased 34% to Rs 3492.27 crore in Q4FY2023 over Q4FY2022.

Business Highlights:

Loan assets of the company increased 13% to Rs 422498 crore at end March 2023 compared to Rs 373135 crore at end March 2022. Within the loan book, the generation loan book moved up 7% to Rs 227024 crore, while transmission loan book rose 2% to Rs 31122 crore and distribution jumped 24% to Rs 158681 crore at end March 2023.

As per the borrower segment wise classification, the private sector loan book galloped 23% to Rs 72732 crore, while the government sector loan book expanded 11% to Rs 349766 crore end March 2023.

Disbursement of the company surged 133% to Rs 38788 crore in Q4FY2023 compared to Rs 16651 crore in Q4FY2022, as the generation disbursements moved up 163% to Rs 14928 crore, while transmission disbursements also increased 41% to Rs 2992 crore. Further, the distribution disbursements jumped 108% to Rs 18117 crore in Q4FY2023.

As per the borrower segment wise classification, the private sector disbursements zoomed 406% to Rs 12680 crore, while the government sector disbursements increased 85% to Rs 26108 crore in Q4FY2023.

Outstanding borrowings increased by 13% to Rs 362638 crore at end March 2023, driven by bonds borrowing rising 14% to Rs 288836 crore at end March 2023. Term loans rose 6% to Rs 69818 crore, while short-term loans jumped 1640% to Rs 3984 crore at end March 2023.

NIM of the company declined 19 bps yoy to 3.36% in Q4FY2023. The yield on assets rose 14 bps to 10.04%, while cost of funds increased 46 bps yoy to 7.51%.

The gross stage 3 asset declined to 3.91% end March 2023 from 4.21% a quarter ago, which entirely related to private sector exposure. Net stage 3 asset also declined to 1.07% end March 2023 from 1.19% a quarter ago.

Capital Adequacy Ratio stood at 24.37% at end March 2023 compared to 23.48% a year earlier.

Book value of the company stood at Rs 258.33 per share at end March 2023. Adjusted Book value (net of net stage 3 assets) stood at Rs 241.28 per share at end March 2023.

Financial Performance FY2023

For the year ended March 2023 (FY2023), Power Finance Corporation reported flat income from Operations at Rs 36701.22 crore, while interest expense increased 3% to Rs 23282.57 crore, leading to a 4% decline in NII to Rs 13418.65 crore.

Other income increased 57% to Rs 2964.41 crore. The Staff cost rose 3% to Rs 219.01 crore, while the other expenditure jumped 83% to Rs 2270.58 crore. The ensuing Gross Profit declined 4% to Rs 13893.47 crore in FY2023. The depreciation increased 44% to Rs 19.06 crore. The company has written back provisions of Rs 296.21 crore in FY2023 compared with the charge of Rs 2222.14 crore. The profit before Tax increased 16% to Rs 14170.62 crore in FY2023. The Tax expense increased 16% to Rs 2565.15 crore. PAT improved 16% to Rs 11605.47 crore in FY2023.

Power Finance Corporations: Standalone Results
Particulars	2303 (3)	2203 (3)	Var %	2203 (12)	2103 (12)	Var %
Income from operations	9566.20	8938.03	7	36701.22	36701.22	0
Other Income	620.03	936.37	-34	2964.41	1889.95	57
Total Income	10186.23	9874.40	3	39665.63	38591.17	3
Interest Expenses	6140.71	5572.06	10	23282.57	22671.30	3
Other expenses	253.33	747.66	-66	2489.59	1456.88	71
Gross profit	3792.19	3554.68	7	13893.47	14462.99	-4
Depreciation	5.18	2.85	82	19.06	13.20	44
Provisions	-494.20	351.75	-240	-296.21	2222.14	-113
Profit before tax	4281.21	3200.08	34	14170.62	12227.65	16
Provision for tax	788.94	590.63	34	2565.15	2205.75	16
Net profit	3492.27	2609.45	34	11605.47	10021.90	16
EPS*(Rs)	52.9	39.5		44.0	38.0
Adj BV (Rs)	241.3	199.9		241.3	199.9
* Annualized on current equity of Rs 2640.08 crore. Face Value: Rs 10, figures in Rs Crore
Source: Capitaline Corporate Database

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