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Results update Q1FY27 – Power Finance Corporate

• High pre-payments dragged down disbursements by -44.2% y-o-y and -49.6% q-o-q), keeping AUM growth modest at 3.7% y-o-y and decline of -1.7% q-o-q.
• NIM shrunk to 3.67% down by -31 bps y-o-y, yet PPoP rose 10.9% y-o-y on the back of jump in other income.
• However, PAT beat estimates by 7.2%, on negative credit costs (-Rs. 556 crore) following key provision reversals.
• Although operational momentum remains soft in Q1FY27 that prompted modest EPS revisions. However, profitability remains resilient. Benign credit costs, ongoing recoveries, and steady asset quality continue to safeguard earnings, supporting for strong return ratios, RoA >3.0% and RoE ~17% for FY28. The stock trades at an attractive valuation of 0.6x FY28E P/BV, it also offers a healthy dividend yield. Hence, we maintain buy rating with revised SoTP based PT of Rs. 500.

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