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You are here : IndiaNotes >> Research & Analysis >> Companies >> Power Finance Corporation Ltd. >> Research

Power Finance: Margins are likely to remain largely stable

Motilal Oswal | Published: 11 Jul, 2012  | Source : ValueNotes.com | Follow Author | Add to my Favourites


Highlights:

- Motilal Oswal expects Power Finance Corporation (POWF) to post healthy loan growth of ~27% YoY and ~2% QoQ.

- Margins are likely to remain largely stable on a sequential basis.

- After marked-to-market (MTM) write-backs in the last two quarters, MTM loss of Rs400m is expected in 1QFY13 due to steep Rs depreciation.

- Asset quality is a key monitorable, given the uncertain macro environment. Motilal OSwal conservatively factors in provisions of Rs500m for the quarter.

- The stock trades at 1x FY13E and 0.9x FY14E BV, and 6.4x FY13E and 5.7x FY14E EPS. Maintain Buy.

- Key things to watch for: (1) Management's outlook on business growth and asset quality, (2) Movement in spreads.

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