Power Finance Corporation (PFC) and REC fell as much as 6% on August 10 after global brokerage CLSA cut its target prices

$PFC Shares of Power Finance Corporation (PFC) and REC fell as much as 6% on August 10 after global brokerage CLSA cut its target prices for both stocks while retaining an ‘Outperform’ rating following mixed June-quarter results. State-owned PFC reported a marginal increase in consolidated net profit to ₹8,998 crore in Q1 FY27, compared with ₹8,981 crore in the same quarter last year. Revenue from operations stood largely unchanged at ₹28,526.86 crore, against ₹28,539.04 crore in Q1 FY26. CLSA noted that loan growth continued to moderate for both PFC and REC, primarily due to the run-down of the Revolving Bill Payment Facility (RBPF) scheme book and modest growth across other segments. PFC recorded 4% year-on-year loan growth, while REC reported 1% growth. A positive development was the continued reduction in the RBPF portfolio, which now accounts for just 3% of REC’s loan book. Core margins were slightly lower sequentially, reflecting a moderation in lending yields. REC also reported a sharp forex loss due to the depreciation of the rupee. However, asset quality remained benign. CLSA has trimmed its FY27 profit-after-tax estimates for both companies by 2%-3%. PFC had earlier indicated that it aims to complete its proposed merger with REC by April 2027. Meanwhile, PFC Group continues to remain the country’s largest financier of renewable energy projects, with its renewable loan book standing at ₹1,63,184 crore as of June 30, 2026. The company continues to demonstrate resilient performance, supported by a strong balance sheet and healthy asset quality. With robust fundamentals and a clear strategic focus, PFC remains well positioned to capitalize on emerging opportunities in the power and renewable energy sectors and drive long-term growth.