Maharatna PSU Stock Showing Upside Sign, Gets "Buy" Call From ICICI Securities For High Return

ICICI Securities, a renowned brokerage firm maintains its bullish outlook on Power Finance Corporation Ltd (PFC), a midcap Maharatna Financial sector stock. The brokerage has assigned a "Buy" tag on the stock with a target price of Rs 191 apiece. It claims a potential upside of up to 29% from its current level. The stock's market value is Rs 39,205.21 crore. Read below to know more:

Stock Outlook, Returns, & 52-week low/high

The stock of PFC on NSE last traded at Rs 148.50 apiece, down 1.16% as compared to its previous close of Rs 150.25 apiece. The stock is currently trading 8.23% down from its 52 week high which it recorded on 9 January 2023. While its 52 week low was recorded at Rs 97.10 apiece on 20 June 2022.

The stock has gained 1.85% in the past 1 week, and 20.68% in 3 months, respectively. It gained 24.79% in the past 1 year. It gained 17.44% in the past 3 years and the highest 38.59% in the past 5 years, respectively.

ICICI Securities suggests "Buy" for a target price of Rs 191 apiece

According to the brokerage, Power Finance Corporation's (PFC) Q3FY23 earnings surpassed I-Sec estimates - buoyed by provisioning write-back of Rs1.3bn. Flow of resolutions led to 54bps QoQ and 115bps YoY decline in stage-3 pool to 4.21%, while adequate provisioning towards the same also led to 12bps QoQ and 81bps YoY decline in net stage-3 to 1.19%. Drawing down from sanctions pipeline, disbursements grew 36% YoY in 9MFY23.

Incremental sanctions under various power schemes revive hope on loan book growth gathering pace gradually (was up 4% QoQ and 6% YoY). Of the total foreign currency portfolio, 62% (68% QoQ and 55% YoY) has been hedged to minimise the impact of INR depreciation; PFC booked forex translation/ transaction loss of Rs2.6bn in Q3FY23. It declared an interim dividend of Rs8.75/share in 9MFY23, which works out to ~28% payout of PAT in 9MFY23.

"Given the inexpensive valuations at 0.6x FY24E P/ABV, coupled with improving asset quality metrics and likely gradual uptick in AUM growth, we maintain BUY on the stock with an unchanged target price of Rs191 (0.8x FY24 P/ABV)," the brokerage has said.

 

 

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.