PFC

PFC has recalibrated its growth guidance to ~10-11% for FY26, reflecting a more cautious yet sensible approach to financing in India's evolving power sector. This calibration in loan growth guidance from the previous higher growth expectations is primarily driven by significant technological transitions in energy generation and changes in the landscape of government support schemes. This strategic moderation in loan growth aims to ensure growth without incurring excessive balance sheet risks. The company highlighted that energy transition from coal to renewables is fundamentally altering the nature of power-sector lending, with solar PV now gaining wide acceptance. Further, battery storage is emerging as a key enabler for integrating renewables into the grid, with government mandates now requiring two-hour storage across all new tenders. Outlook We expect a CAGR of ~12%/8% in AUM/PAT over FY25-27E, with RoA/RoE of 3%/18% in FY27E. Our BUY rating on the stock is predicated primarily on undemanding valuations of 0.9x FY27E standalone P/BV, with favorable riskreward. Our SoTP (Mar’27E)-based TP stands at INR485 (based on 1.1x target multiple for the PFC standalone business and INR193/share for PFC’s stake in REC after hold-co discount of 20%).