Capitaline

Results 12-Nov-21

Analysis

Power Finance Corporation

Loan book growth dips, asset quality improves

Power Finance Corporation has reported 32% growth in the net profit to Rs 2758.65 crore in the quarter ended September 2021 (Q2FY2022). Net Interest Income (NII) of the company rose 5% to Rs 3530 crore, while the company has exhibited improvement in asset quality in Q2FY2022.

The company has showed slight decline in Net Interest Margin (NIM) to 3.63% in Q2FY2022 from 3.70% in the preceding quarter. The interest spreads of the company eased to 2.89% in Q2FY2022 from 2.96% in the preceding quarter and 3.09% in the corresponding quarter last year.

Quarterly performance

The income from operations was flat at Rs 9202.40 crore in the quarter ended September 2021. Other income improved 1364% to Rs 556.82 crore. Total income increased 6% to Rs 9759.22 crore in the quarter ended September 2021. The interest expense declined -3% to Rs 5672.41 crore.

The employee expenses rose 10% to Rs 53.03 crore, while the other expenditures stood at Rs 190.49 crore in the quarter ended September 2021.

The ensuing Gross Profit stood at Rs 3843.29 crore in the quarter ended September 2021, showing an increase of 11% on yoy basis.

The depreciation during the quarter under review stood at Rs 3.59 crore up from Rs 2.40 crore in Q2FY2021. The provision dipped 52% to Rs 456.27 crore.

The Profit before Tax jumped 36% to Rs 3383.43 crore in the quarter ended September 2021. An effective tax rate was higher at 18.5% in Q2FY2022 compared with 16.4% in Q2FY2021.

PAT increased 32% to Rs 2758.65 crore in Q2FY2022 over Q2FY2021.

Highlights:

Loan assets of the company were flat at Rs 371732 crore at end September 2021 compared to Rs 371158 crore at end September 2020.

Within the loan book, the generation loan book declined -11% to Rs 219818 crore, while transmission loan book fell -7% to Rs 28100 crore and distribution jumped 33% to Rs 121804 crore at end September 2021.

As per the borrower segment wise classification, the private sector loan book was flat at Rs 61017 crore, while the government sector loan book was also steady at Rs 310715 crore end September 2021.

Disbursement of the company (excluding R-APDRP) declined -51% to Rs 14161 crore in Q2FY2022 compared to Rs 28825 crore in Q2FY2021, as the generation disbursement declined -73% to Rs 2617 crore, while transmission disbursements also fell -67% to Rs 459 crore. Further, the distribution disbursements declined -37% to Rs 11070 crore in Q2FY2022.

As per the borrower segment wise classification, the private sector disbursements declined -52% to Rs 1435 crore, while the government sector disbursements dipped -51% to Rs 12726 crore in Q2FY2022.

Outstanding Borrowings declined by -1% to Rs 320094 crore at end September 2021, driven by term loans declining -3% to Rs 64366 crore, while short-term loans dipped -91% to Rs 498 crore at end September 2021. Bonds borrowing rose 1% to Rs 255230 crore at end September 2021.

NIM of the company declined -6 bps yoy to 3.63% in Q2FY2022. The yield on assets eased -42 bps to 10.28%, while cost of funds dipped -22 bps yoy to 7.39%.

The gross stage 3 asset declined to 5.67% end September 2021 from 5.72% a quarter ago, which entirely related to private sector exposure. Net stage 3 asset also declined to 1.92% end September 2021 from 2.00% a quarter ago.

Capital Adequacy Ratio stood at 21.76% at end September 2021 compared to 18.18% a year earlier.

Book value of the company stood at Rs 214.55 per share at end September 2021. Adjusted Book value (net of net stage 3 assets) stood at Rs 187.46 per share at end September 2021.

Financial Performance H1FY2022

For half year ended September 2021 (H1FY2022), Power Finance Corporation reported 3% increase in Income from Operations at Rs 18466.29 crore, while interest expense declined -1% to Rs 11411.72 crore, leading to a 10% rise in NII to Rs 7054.57 crore. Other income increased 876% to Rs 618.98 crore. The Staff cost rose 5% to Rs 101.54 crore, while the other expenditure jumped 9% to Rs 515.84 crore. The ensuing Gross Profit moved up 19% to Rs 7056.17 crore in H1FY2022. The Depreciation stood at Rs 6.39 crore, while provisions dipped -31% to Rs 906.81 crore in H1FY2022. The profit before Tax galloped 33% to Rs 6142.97 crore in H1FY2022. The Tax expense increased 33% to Rs 1110.73 crore. PAT improved 33% to Rs 5032.24 crore in H1FY2022.

Power Finance Corporations: Standalone Results
Particulars	2109 (3)	2009 (3)	Var %	2109 (6)	2009 (6)	Var %	2103 (12)	2003 (12)	Var %
Income from operations	9202.40	9193.91	0	18466.29	17942.92	3	36145.76	31950.42	13
Other Income	556.82	38.04	1364	618.98	63.45	876	1620.81	1420.64	14
Total Income	9759.22	9231.95	6	19085.27	18006.37	6	37766.57	33371.06	13
Interest Expenses	5672.41	5829.42	-3	11411.72	11505.60	-1	23194.49	21853.19	6
Other expenses	243.52	-48.59	-601	617.38	568.32	9	857.20	2325.01	-63
Gross profit	3843.29	3451.12	11	7056.17	5932.45	19	13714.88	9192.86	49
Depreciation	3.59	2.40	50	6.39	4.34	47	11.17	9.10	23
Provisions	456.27	953.17	-52	906.81	1306.21	-31	3496.40	991.22	253
Profit before tax	3383.43	2495.55	36	6142.97	4621.90	33	10207.31	8192.54	25
Provision for tax	624.78	410.50	52	1110.73	837.29	33	1763.30	2537.40	-31
Net profit	2758.65	2085.05	32	5032.24	3784.61	33	8444.01	5655.14	49
EPS*(Rs)	41.8	31.6		38.1	28.7		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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