Capitaline

Results 14-Aug-21

Analysis

Power Finance Corporation

Margins and asset quality improves, loan growth slows

Power Finance Corporation has reported 34% growth in the net profit to Rs 2273.59 crore in the quarter ended June 2021 (Q1FY2022). Net Interest Income (NII) of the company rise at an accelerated pace of 15% to Rs 3525 crore, while the company has exhibited an improvement in asset quality in Q1FY2022.

The company has also improved Net Interest Margin (NIM) to 3.70% in Q1FY2022 from 3.30% in the preceding quarter. The interest spreads of the company were nearly flat 2.96% in Q1FY2022 from 3.03% in the preceding quarter and 3.00% in the corresponding quarter last year.

Quarterly performance

The company has posted 6% increase in income from operations at Rs 9263.89 crore in the quarter ended June 2021. Other income improved 145% to Rs 62.16 crore. Total income increased 6% to Rs 9326.05 crore in the quarter ended June 2021. The interest expense increased 1% to Rs 5739.31 crore.

The employee expenses declined 4% to Rs 48.51 crore, while the other expenditures also fell 43% to Rs 325.35 crore in the quarter ended June 2021.

The ensuing Gross Profit stood at Rs 3212.88 crore in the quarter ended June 2021, showing an increase of 29% on yoy basis.

The depreciation during the quarter under review stood at Rs 2.80 crore down from Rs 1.94 crore in Q1FY2021.

The Profit before Tax jumped 30% to Rs 2759.54 crore in the quarter ended June 2021. An effective tax rate was lower at 17.6% in Q1FY2022 compared with 20.1% in Q1FY2021. PAT increased 34% to Rs 2273.59 crore in Q1FY2022 over Q1FY2021.

Highlights:

Loan assets of the company increased 5% to Rs 369983 crore at end June 2021 compared to Rs 353595 crore at end June 2020. Within the loan book, the generation loan book declined 7% to Rs 226166 crore and transmission loan book also fell 5% to Rs 28472 crore, while distribution loan book jumped 45% to Rs 113308 crore at end June 2021.

As per the borrower segment wise classification, the private sector loan book rose 4% to Rs 61149 crore, while the government sector loan book moved up 5% to Rs 308834 crore end June 2021.

Disbursement of the company declined 32% to Rs 11728 crore in Q1FY2022 compared to Rs 17271 crore in Q1FY2021, as the generation disbursement dipped 42% to Rs 6356 crore, while transmission disbursements also fell 69% to Rs 507 crore. The distribution disbursements fell 4% to Rs 4465 crore in Q1FY2022. As per the borrower segment wise classification, the private sector disbursements increased 28% to Rs 3101 crore, while the government sector disbursements declined 45% to Rs 8231 crore in Q1FY2022.

Outstanding Borrowings rose 3% to Rs 323131 crore at end June 2021, driven by bonds borrowing rising 1% to Rs 256741 crore at end June 2021. Term loans moved up 16% to Rs 63280 crore, while short-term loans dipped 39% to Rs 3110 crore at end June 2021.

NIM of the company improved 22 bps yoy to 3.70% in Q1FY2022. The yield on assets eased 29 bps to 10.39%, while cost of funds dipped 25 bps yoy to 7.43%.

The gross stage 3 assets were stable at 5.72% end June 2021 from 5.70% a quarter ago, which entirely related to private sector exposure. Net stage 3 asset declined to 2.00% end June 2021 from 2.09% a quarter ago.

Capital Adequacy Ratio stood at 21.16% at end June 2021 compared to 17.32% a year earlier.

Book value of the company stood at Rs 207.34 per share at end June 2021. Adjusted Book value (net of net stage 3 assets) stood at Rs 179.32 per share at end June 2021.

Financial Performance FY2021

For year ended March 2021 (FY2021), Power Finance Corporation reported 13% increase in Income from Operations at Rs 36145.76 crore, while interest expense increased 6% to Rs 23194.49 crore, leading to a 28% rise in NII to Rs 12951.27 crore. Other income increased 14% to Rs 1620.81 crore. The staff cost was flat at Rs 194.62 crore, while the other expenditure declined 69% to Rs 662.58 crore. The ensuing Gross Profit moved up 49% to Rs 13714.88 crore in FY2021. The Depreciation stood at Rs 11.17 crore, while provisions increased 253% to Rs 3496.40 crore in FY2021. The profit before Tax increased 25% to Rs 10207.31 crore in FY2021. The Tax expense dipped 31% to Rs 1763.30 crore. PAT improved 49% to Rs 8444.01 crore in FY2021.

Power Finance Corporation: Standalone Results
Particulars	2106 (3)	2006 (3)	Var %	2103 (12)	2003 (12)	Var %
Income from operations	9263.89	8749.01	6	36145.76	31950.42	13
Other Income	62.16	25.41	145	1620.81	1420.64	14
Total Income	9326.05	8774.42	6	37766.57	33371.06	13
Interest Expenses	5739.31	5676.18	1	23194.49	21853.19	6
Other expenses	373.86	616.91	-39	857.20	2325.01	-63
Gross profit	3212.88	2481.33	29	13714.88	9192.86	49
Depreciation	2.80	1.94	44	11.17	9.10	23
Provisions	450.54	353.04	28	3496.40	991.22	253
Profit before tax	2759.54	2126.35	30	10207.31	8192.54	25
Provision for tax	485.95	426.79	14	1763.30	2537.40	-31
Net profit	2273.59	1699.56	34	8444.01	5655.14	49
EPS*(Rs)	34.4	25.8		32.0	21.4
* Annualized on current equity of Rs 2640.08 crore. Face Value: Rs 10, figures in Rs Crore
Source: Capitaline Corporate Database

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