Capitaline

Results 10-Nov-22

Analysis

Power Finance Corporation

Net NPA dips to six-year low

Power Finance Corporation has reported 9% growth in the net profit to Rs 2998.75 crore in the quarter ended September 2022 (Q2FY2023). Net Interest Income (NII) of the company increased 9% to Rs 3848 crore, while the company has exhibited sharp improvement in asset quality in Q2FY2023.

The company has witnessed decline in Net Interest Margin (NIM) to 3.56% in Q2FY2023 from 3.69% in the preceding quarter. The interest spreads of the company declined to 2.76% in Q2FY2023 from 2.93% in the preceding quarter and 2.89% in the corresponding quarter last year.

Quarterly performance

The company has posted 4% increase in income from operations at Rs 9533.41 crore in the quarter ended September 2022. Other income declined 2% to Rs 545.04 crore. Total income increased 3% to Rs 10078.45 crore in the quarter ended September 2022. The interest expenses were flat at Rs 5684.78 crore.

The employee expenses declined 4% to Rs 51.11 crore, while the other expenditures jumped 171% to Rs 516.67 crore in the quarter ended September 2022.

The ensuing Gross Profit was flat at Rs 3825.89 crore in the quarter ended September 2022.

The depreciation during the quarter under review stood at Rs 4.09 crore up from Rs 3.59 crore in Q2FY2022.

The Profit before Tax increased 8% to Rs 3669.97 crore in the quarter ended September 2022. An effective tax rate was slightly lower at 18.3% in Q2FY2023 compared with 18.5% in Q2FY2022. PAT increased 9% to Rs 2998.75 crore in Q2FY2023 over Q2FY2022.

Highlights:

Loan assets of the company increased 1% to Rs 376696 crore at end September 2022 compared to Rs 371732 crore at end September 2021. Within the loan book, the generation loan book declined 2% to Rs 214781 crore, while transmission loan book moved up 2% to Rs 28671 crore and distribution jumped 8% to Rs 131002 crore at end September 2022. As per the borrower segment wise classification, the private sector loan book fell 2% to Rs 60100 crore, while the government sector loan book rose 2% to Rs 316596 crore end September 2022.

Disbursement of the company increased 21% to Rs 17147 crore in Q2FY2023 compared to Rs 14161 crore in Q2FY2022, as the generation disbursement moved up 242% to Rs 8942 crore, while transmission disbursements also increased 123% to Rs 1025 crore. However, the distribution disbursements declined 36% to Rs 7124 crore in Q2FY2023. As per the borrower segment wise classification, the private sector disbursements jumped 263% to Rs 5206 crore, while the government sector disbursements declined 6% to Rs 11941 crore in Q2FY2023.

Outstanding Borrowings increased by 1% to Rs 323522 crore at end September 2022, driven by bonds borrowing rising 1% to Rs 257485 crore at end September 2022. Term loans declined 3% to Rs 62341 crore, while short-term loans jumped 642% to Rs 3696 crore at end September 2022.

NIM of the company declined 7 bps yoy to 3.56% in Q2FY2023. The yield on assets eased 21 bps to 10.07%, while cost of funds fell 8 bps yoy to 7.31%.

The gross stage 3 asset declined to 4.75% end September 2022 from 5.65% a quarter ago, which entirely related to private sector exposure. Net stage 3 asset also declined to six year low of 1.31% end September 2022 from 1.73% a quarter ago.

Capital Adequacy Ratio stood at 24.29% at end September 2022 compared to 21.76% a year earlier.

Book value of the company stood at Rs 238.10 per share at end September 2022. Adjusted Book value (net of net stage 3 assets) stood at Rs 219.39 per share at end September 2022.

Financial Performance H1FY2023

For six months ended September 2022 (H1FY2023), Power Finance Corporation flat income from Operations at Rs 18462.43 crore, while interest expense declined 2% to Rs 11146.36 crore, leading to a 4% rise in NII to Rs 7316.07 crore. Other income increased 5% to Rs 652.57 crore. The staff cost rose 3% to Rs 104.82 crore, while the other expenditure jumped 156% to Rs 1321.54 crore. The ensuing Gross Profit declined 7% to Rs 6542.28 crore in H1FY2023. The Depreciation stood at Rs 8.87 crore, while provisions dipped 64% to Rs 323.55 crore in H1FY2023. The profit before Tax to rose 1% to Rs 6209.86 crore in H1FY2023. The Tax expense declined 1% to Rs 1101.59 crore. PAT improved 2% to Rs 5108.27 crore in H1FY2023.

Power Finance Corporations: Standalone Results
Particulars	2209 (3)	2109 (3)	Var %	2209 (6)	2109 (6)	Var %	2203 (12)	2103 (12)	Var %
Income from operations	9533.41	9202.40	4	18462.43	18466.29	0	36701.22	36145.76	2
Other Income	545.04	556.82	-2	652.57	618.98	5	1889.95	1620.81	17
Total Income	10078.45	9759.22	3	19115.00	19085.27	0	38591.17	37766.57	2
Interest Expenses	5684.78	5672.41	0	11146.36	11411.72	-2	22671.30	23194.49	-2
Other expenses	567.78	243.52	133	1426.36	617.38	131	1456.88	857.20	70
Gross profit	3825.89	3843.29	0	6542.28	7056.17	-7	14462.99	13714.88	5
Depreciation	4.09	3.59	14	8.87	6.39	39	13.20	11.17	18
Provisions	151.83	456.27	-67	323.55	906.81	-64	2222.14	3496.40	-36
Profit before tax	3669.97	3383.43	8	6209.86	6142.97	1	12227.65	10207.31	20
Provision for tax	671.22	624.78	7	1101.59	1110.73	-1	2205.75	1763.30	25
Net profit	2998.75	2758.65	9	5108.27	5032.24	2	10021.90	8444.01	19
EPS*(Rs)	45.4	41.8		38.7	38.1		38.0	32.0
Adj BV (Rs)	219.4	187.5		219.4	187.5		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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