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Q3FY12 –Asset quality concerns emerge
• PFC reported PAT growth of 68.2% Y-o-Y in Q3FY12 on back of write back of provisions done for
forex losses, adjusted for this income PAT would have shown growth of just 5.1% Y-o-Y basis in
Q3FY12.
• Disbursements have grown 35.8% Y-o-Y and sanctions decreased by 13.2% Y-o-Y in Q3FY12.
• NIM stood at 3.9% in Q3FY12 vs 4.0% in Q2FY12 and 4.1% in Q3FY11. There was reversal of `190
mn interest income from an account that defaulted during the quarter. This impacted NIMs by
~7bps negatively.
• Cost to income ratio stood at 2.7% in Q3FY12 vs 3.0% in Q3FY11 mainly on account of stable
operating expenses during the quarter.
• Asset quality deteriorated sequentially as Gross NPA stood at 0.5% in Q3FY12 vs 0.02% in
Q2FY12. This led to provisions of `390 mn in Q3FY12 vs nil in Q2FY12.
• CAR stood at 17.92% in Q3FY12.
Result Highlights
Business growth remains strong
Disbursements have grown by 35.8% in Q3FY12 but focus has been towards private players.
Disbursement to generation companies has fallen sharply to 45% of total disbursement in Q3FY12 vs
70% in Q3FY11. The company is putting in stringent norms for disbursement like fuel supply
agreement should be with the company. This is expected to keep an check on fresh delinquencies.
PAT growth supported by reversal of provision in light of AS11
PAT has grown mainly on account of reversal of provision for forex loss. CI ratio improved which
also added to profits. Some pressure came from provision on NPAs as there was rise in Gross NPA
during the quarter.
GNPA rise due to default from Konaseema
GNPA has moved sharply to 0.5% in Q3FY12 vs 0.02% in Q2FY12 as there was default by a borrower
Konaseema to whom the company’s exposure stands at `3950 mn. One more project Shree
Maheshwar project is the one where some stress is building up. This might move into NPA in
Q4FY12.
Valuation & Viewpoint
PFC has performed well on all parameters but concerns on asset quality have emerged. Asset
quality remains the key concern and improvement in it can lead to higher valuation for the stock as
steps are being taken by government to improve financial conditions of SEBs. At the CMP, the stock
is trading at 1.26x and 1.13x Book value of FY12E and FY13E respectively.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q3FY12 –Asset quality concerns emerge
• PFC reported PAT growth of 68.2% Y-o-Y in Q3FY12 on back of write back of provisions done for
forex losses, adjusted for this income PAT would have shown growth of just 5.1% Y-o-Y basis in
Q3FY12.
• Disbursements have grown 35.8% Y-o-Y and sanctions decreased by 13.2% Y-o-Y in Q3FY12.
• NIM stood at 3.9% in Q3FY12 vs 4.0% in Q2FY12 and 4.1% in Q3FY11. There was reversal of `190
mn interest income from an account that defaulted during the quarter. This impacted NIMs by
~7bps negatively.
• Cost to income ratio stood at 2.7% in Q3FY12 vs 3.0% in Q3FY11 mainly on account of stable
operating expenses during the quarter.
• Asset quality deteriorated sequentially as Gross NPA stood at 0.5% in Q3FY12 vs 0.02% in
Q2FY12. This led to provisions of `390 mn in Q3FY12 vs nil in Q2FY12.
• CAR stood at 17.92% in Q3FY12.
Result Highlights
Business growth remains strong
Disbursements have grown by 35.8% in Q3FY12 but focus has been towards private players.
Disbursement to generation companies has fallen sharply to 45% of total disbursement in Q3FY12 vs
70% in Q3FY11. The company is putting in stringent norms for disbursement like fuel supply
agreement should be with the company. This is expected to keep an check on fresh delinquencies.
PAT growth supported by reversal of provision in light of AS11
PAT has grown mainly on account of reversal of provision for forex loss. CI ratio improved which
also added to profits. Some pressure came from provision on NPAs as there was rise in Gross NPA
during the quarter.
GNPA rise due to default from Konaseema
GNPA has moved sharply to 0.5% in Q3FY12 vs 0.02% in Q2FY12 as there was default by a borrower
Konaseema to whom the company’s exposure stands at `3950 mn. One more project Shree
Maheshwar project is the one where some stress is building up. This might move into NPA in
Q4FY12.
Valuation & Viewpoint
PFC has performed well on all parameters but concerns on asset quality have emerged. Asset
quality remains the key concern and improvement in it can lead to higher valuation for the stock as
steps are being taken by government to improve financial conditions of SEBs. At the CMP, the stock
is trading at 1.26x and 1.13x Book value of FY12E and FY13E respectively.
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