Power Finance Corp – 4QFY11 - Muted core earnings growth :: RBS,

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In 4QFY11, PFC reported a 14.6% yoy growth in net income from operations compared to 26%
yoy growth in 9MFY11. Thus, core earnings prima facie appear to be lower than estimates. Loan
assets grew 25% yoy. At the current price, stock trades at 10.7x FY12F earnings and 1.5x FY12F
book value.

Power Finance Corp : First cut - Key highlights of 4QFY11 earnings
􀀟 Net income from operations (NII + other income) was up 14.6% yoy to Rs 8.3bn in 4QFY11
and prima facie appears to be lower than estimates. In 9MFY11, the net income from
operations grew by about 26% yoy.
􀀟 ! The company has recognised, an exchange gain of Rs 173mn in 4QFY11 vs. Rs 290mn
gain in 4QFY10 (Rs 280mn loss in 3QFY11). The total exchange loss for FY11 is Rs 264mn.
􀀟 Provision for income tax is about 26% of profit before tax in 4QFY11 compared to 19% in
4QFY10 (27% in 3QFY11). The effective tax rate for FY11 is about 26.1%.
􀀟 The 4QFY11 net profit at Rs 6.1bn (+1% yoy) is lower than estimates. Adjusted for exchange
gain, the net profit seems further lower than estimates for 4QFY11.
􀀟 Loan assets grew by 25% yoy (+8% qoq) to Rs 995bn as of March 2011.
􀀟 The net income from operations grew by 24% yoy in FY11 and the reported net profit for
FY11 is Rs 26.2bn (+11% yoy).
􀀟 At the current market price, the stock trades at 10.7x FY12F earnings and 1.5x FY12F book
value. We have a Buy rating on Power Finance Corporation.