Capitaline

Results 12-Aug-22

Analysis

Power Finance Corporation

Stable margins and asset quality, disbursements dip 59% in Q1FY2023

Power Finance Corporation has reported 7% decline in the net profit to Rs 2109.52 crore in the quarter ended June 2022 (Q1FY2023). Net Interest Income (NII) of the company has eased 2% to Rs 3467 crore. The company has showed improvement in Net Interest Margin (NIM) to 3.69% in Q1FY2023 from 3.55% in the preceding quarter, while notched down 3.70% in the corresponding quarter last year. The interest spreads of the company improved to 2.93% in Q1FY2023 from 2.85% in the preceding quarter and eased from 2.96% in the corresponding quarter last year. The company has exhibited improvement in asset quality in Q1FY2023.

Quarterly performance

The company has posted 4% decline in income from operations at Rs 8938.03 crore in the quarter ended June 2022. Other income improved 58% to Rs 98.52 crore. Total income dipped 3% to Rs 9036.55 crore in the quarter ended June 2022. The interest expense fell 5% to Rs 5461.58 crore.

The employee expenses increased 11% to Rs 53.71 crore, while the other expenditures also jumped 147% to Rs 804.87 crore in the quarter ended June 2022.

The ensuing Gross Profit stood at Rs 2716.39 crore in the quarter ended June 2022, showing a decline of 15% on yoy basis.

The depreciation during the quarter under review stood at Rs 4.78 crore up from Rs 2.80 crore in Q1FY2022.

The Profit before Tax declined 8% to Rs 2539.89 crore in the quarter ended June 2022. An effective tax rate was lower at 16.9% in Q1FY2023 compared with 17.6% in Q1FY2022. PAT declined 7% to Rs 2109.52 crore in Q1FY2023 over Q1FY2022.

Highlights:

Loan assets of the company rose slightly to Rs 370186 crore at end June 2022 compared to Rs 369983 crore at end June 2021. Within the loan book, the generation loan book declined 7% to Rs 210924 crore, while transmission loan book moved up 7% to Rs 30416 crore and distribution jumped 12% to Rs 126615 crore at end June 2022.

As per the borrower segment wise classification, the private sector loan book fell 4% to Rs 58444 crore, while the government sector loan book jumped 1% to Rs 311742 crore end June 2022.

Disbursement of the company (excluding R-APDRP) declined 59% to Rs 4643 crore in Q1FY2023 compared to Rs 11332 crore in Q1FY2022, as the generation disbursement declined 54% to Rs 2942 crore, while transmission disbursements also fell 18% to Rs 417 crore. Further, the distribution disbursements also dipped 74% to Rs 1163 crore in Q1FY2023.

As per the borrower segment wise classification, the private sector disbursements declined 46% to Rs 1665 crore, while the government sector disbursements also fell 64% to Rs 2978 crore in Q1FY2023.

Outstanding Borrowings declined by 3% to Rs 314471 crore at end June 2022, driven by bonds borrowing easing 2% to Rs 250576 crore at end June 2022. Term loans were flat at Rs 63319 crore, while short-term loans dipped 81% to Rs 576 crore at end June 2022.

NIM of the company declined 1 bps yoy to 3.69% in Q1FY2023. The yield on assets eased 38 bps to 10.01%, while cost of funds dipped 35 bps yoy to 7.08%.

The gross stage 3 asset rose to 5.65% end June 2022 from 5.61% a quarter ago, which entirely related to private sector exposure. Net stage 3 asset also declined to 1.73% end June 2022 from 1.76% a quarter ago.

Capital Adequacy Ratio stood at 24.33% at end June 2022 compared to 21.16% a year earlier.

Book value of the company stood at Rs 231.28 per share at end June 2022. Adjusted Book value (net of net stage 3 assets) stood at Rs 207.01 per share at end June 2022.

Financial Performance FY2022

For year ended March 2022 (FY2022), Power Finance Corporation reported 2% increase in Income from Operations at Rs 36701.22 crore, while interest expense declined 2% to Rs 22671.30 crore, leading to a 8% rise in NII to Rs 14029.92 crore. Other income increased 17% to Rs 1889.95 crore. The Staff cost rose 10% to Rs 213.11 crore, while the other expenditure jumped 88% to Rs 1243.77 crore. The ensuing Gross Profit moved up 5% to Rs 14462.99 crore in FY2022. The Depreciation stood at Rs 13.20 crore, while provisions dipped 36% to Rs 2222.14 crore in FY2022. The profit before Tax to increased 20% to Rs 12227.65 crore in FY2022. The Tax expense increased 25% to Rs 2205.75 crore. PAT improved 19% to Rs 10021.90 crore in FY2022.

Power Finance Corporations: Standalone Results
Particulars	2206 (3)	2106 (3)	Var %	2203 (12)	2103 (12)	Var %
Income from operations	8938.03	9263.89	-4	36701.22	36145.76	2
Other Income	98.52	62.16	58	1889.95	1620.81	17
Total Income	9036.55	9326.05	-3	38591.17	37766.57	2
Interest Expenses	5461.58	5739.31	-5	22671.30	23194.49	-2
Other expenses	858.58	373.86	130	1456.88	857.20	70
Gross profit	2716.39	3212.88	-15	14462.99	13714.88	5
Depreciation	4.78	2.80	71	13.20	11.17	18
Provisions	171.72	450.54	-62	2222.14	3496.40	-36
Profit before tax	2539.89	2759.54	-8	12227.65	10207.31	20
Provision for tax	430.37	485.95	-11	2205.75	1763.30	25
Net profit	2109.52	2273.59	-7	10021.90	8444.01	19
EPS*(Rs)	32.0	34.4		38.0	32.0
Adj BV (Rs)	207.0	179.3		199.9	169.2
* 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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