Is Power Finance Corporation Limited a good company for long-term investment? Does it offer any dividend? We have your answers!
Investing in companies that have a growing revenue base and are paying a good dividend is a dream of every investor. If you’re planning to enjoy the dividends for the long term rather than gaining short-term refunds, then it is very important to be a bit more stringent with your investment decision than an average stock marketer.
Looking at the current scenario of the Indian stock market, it is clear that Power Finance Corporation is attracting investors in big numbers by offering a huge dividend of 8.3%. What’s more promising is the fact that PFC has a clean payment history of more than a decade.
Because of the high dividend, most investors buy PFC shares to have a stable source of passive income. However, in order to hold such shares for a long time, it is very important to perform a proper risk analysis. With that in mind, we are providing a complete overview of PFC, including the PFC share price analysis, financial performance, and other things to know before investing in the company. So, if you want to learn more, keep reading!
What is Power Finance Corporation Limited?
Power Finance Corporation Limited or PFC, is a reputed finance company established in 1986. The current PFC share price is around ₹133.
The company is well known for offering assured financial assistance to the major power sector services for financing and meeting development requirements of the growing power sector of India. Moreover, the company mostly raises funds by issuing bonds, and term loans from various financial institutions such as Banks, FIs, and ECBs.
Moreover, the products and services provided by PFC include fund and non-fund based products and policies, as well as non-fund based consultancy products.
As far as the management is concerned, the company is thriving under the leadership of renowned leaders including Ravindra Singh Dhillon, Praveen Kumar Singh, R.C Mishra, Parminder Chopra, Manohar Balwani.
PFC financial background
The current market cap of PFC is recorded at ₹ 35231.89 Cr. Also, in recent months, the company has recorded ₹37,2259 Cr of gross sales and a net income of ₹37, 3710.6 Cr.[Learn more about PFC share price & financial background here:
Major Strengths of PFC
From our PFC share price analysis, we have discovered the following strengths of the company:
- Increased PAT margin by 6.08%.
- PFC is trading 0.57 times higher than its book value
- PFC’s promoters shareholding is recorded at 55.99%.
- The operating value of the company has grown significantly over the last three years with an impressive CAGR of 12.74%.
Below is a detailed description of these PFC share strengths:
6.08% increase in PAT margin
The PAT margin of any organization indicates how well it controls its cost. It is one of the most useful indicators for determining the financial health and performance of the company. Note that the net profit of the company is recorded at ₹8,444 Crore along with 24.3% of compounded growth profit over a period of the past three years. Overall, the company has an impressive profit margin of 22.68 %.
When you perform a stock analysis, always ensure that the EPS value of the stock is growing at a faster pace than its revenue. The reason is, it shows that the management of the company is up to the required levels and is continuously increasing the efficiency at which it runs its operations. The EPS growth of PFC is recorded at 49.32%.
Return on Equity (ROE)
Power Finance Corporation has an ROE value of 17.31% for this year. If any company has an ROE figure greater than or equal to 20, then it is considered financially healthy. And if the ROE value is less than 20 but greater than or equal to 10, then it is average, else poor. As you can see, PFC has an average ROE value, neither too good, nor too bad.
Investors can use the P/E value of a company to check if the stocks are worth the current price or not. It offers a fair idea as to whether or not it’s a good idea to invest in the company. As for PFC, its P/E ratio for the recent year is 3.54. Further, its average PFC for the past five years is recorded to be 7.16.
The value of the P/B ratio for Power Finance Corp is 0.64. Further, the last 5 years of average P/B ratio is listed at 0.71. You can compare these figures with the current market price per share to determine whether the PFC share is undervalued or overvalued.
We have discussed all the factors you need to know along with the PFC share price before investing in a PFC share. While it is a good company for long-term investment, it is still better to make any final decision after consulting your trusted financial advisor.