Capitaline

Results 12-Aug-23

Analysis

Power Finance Corporation

Strong loan growth at 17%, improving asset quality

Power Finance Corporation has reported 43% growth in the net profit to Rs 3006.94 crore in the quarter ended June 2023 (Q1FY2024). Net Interest Income (NII) of the company rose 1% to Rs 3503 crore, while the company has exhibited improvement in asset quality in Q1FY2024.

Net Interest Margin (NIM) eased to 3.34% in Q1FY2024 from 3.36% in the preceding quarter and 3.69% in the corresponding quarter last year. The interest spreads of the company moderated to 2.51% in Q1FY2024 from 2.53% in the preceding quarter and 2.93% 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 June 2023. Other income improved 436% to Rs 575.98 crore. Total income increased 12% to Rs 10142.18 crore in the quarter ended June 2023. The interest expense increased 21% to Rs 6620.69 crore.

The employee expenses rose 8% to Rs 58.06 crore, while the other expenses were written back to the extent of Rs 213.40 crore in the quarter ended June 2023.

The ensuing Gross Profit stood at Rs 3676.83 crore in the quarter ended June 2023, showing an increase of 35% on yoy basis.

The depreciation during the quarter under review stood at Rs 3.64 crore down from Rs 4.78 crore in Q1FY2023. Provisions dipped 99% to Rs 2.15 crore in Q1FY2024.

The Profit before Tax jumped 45% to Rs 3671.04 crore in the quarter ended June 2023. An effective tax rate was higher at 18.1% in Q1FY2024 compared with 16.9% in Q1FY2023. PAT increased 43% to Rs 3006.94 crore in Q1FY2024 over Q1FY2023.

Highlights:

Loan assets of the company increased 17% to Rs 432339 crore at end June 2023 compared to Rs 370186 crore at end June 2022. Within the loan book, the generation loan book moved up 8% to Rs 227052 crore, while transmission loan book rose 7% to Rs 32627 crore and distribution jumped 32% to Rs 166726 crore at end June 2023. As per the borrower segment wise classification, the private sector loan book rose 28% to Rs 74569 crore, while the government sector loan book jumped 15% to Rs 357770 crore end June 2023.

Disbursement of the company surged 391% to Rs 22792 crore in Q1FY2024 compared to Rs 4643 crore in Q1FY2023, as the generation disbursement moved up 73% to Rs 5098 crore, while transmission disbursements also galloped 399% to Rs 2080 crore. Further, the distribution disbursements jumped 1189% to Rs 14994 crore in Q1FY2024.

As per the borrower segment wise classification, the private sector disbursements increased 75% to Rs 2915 crore, while the government sector disbursements surged 567% to Rs 19877 crore in Q1FY2024.

Outstanding Borrowings increased by 17% to Rs 366508 crore at end June 2023, driven by bonds borrowing rising 17% to Rs 292986 crore at end June 2023. Term loans rose 7% to Rs 67531 crore, while short-term loans jumped 940% to Rs 5991 crore at end June 2023.

NIM of the company declined -35 bps yoy to 3.34% in Q1FY2024. The yield on assets eased -16 bps to 9.85%, while cost of funds rose 26 bps yoy to 7.34% .

The gross stage 3 asset declined to 3.82% end June 2023 from 3.91% a quarter ago, which entirely related to private sector exposure. Net stage 3 asset also declined to 1.04% end June 2023 from 1.07% a quarter ago.

Capital Adequacy Ratio stood at 25.08% at end June 2023 compared to 24.33% a year earlier.

Book value of the company stood at Rs 270.32 per share at end June 2023. Adjusted Book value (net of net stage 3 assets) stood at Rs 253.27 per share at end June 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	2306 (3)	2206 (3)	Var %	2203 (12)	2103 (12)	Var %
Income from operations	9566.20	8929.02	7	36701.22	36701.22	0
Other Income	575.98	107.53	436	2964.41	1889.95	57
Total Income	10142.18	9036.55	12	39665.63	38591.17	3
Interest Expenses	6620.69	5461.58	21	23282.57	22671.30	3
Other expenses	-155.34	858.58	-118	2489.59	1456.88	71
Gross profit	3676.83	2716.39	35	13893.47	14462.99	-4
Depreciation	3.64	4.78	-24	19.06	13.20	44
Provisions	2.15	171.72	-99	-296.21	2222.14	-113
Profit before tax	3671.04	2539.89	45	14170.62	12227.65	16
Provision for tax	664.10	430.37	54	2565.15	2205.75	16
Net profit	3006.94	2109.52	43	11605.47	10021.90	16
EPS*(Rs)	45.6	32.0		44.0	38.0
Adj BV (Rs)	253.3	207.0		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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