Stock Review: POWER FINANCE CORP

PFC's stock is trading at 2.5 times the book value. Its close peer, Rural Electrification Corporation trades at 2.6 times the book value. PFC's correlation with the market is lower than 1, which reflects relatively lower risk. The company has a pipeline of 1,63,666 crore of loan sanctions. This will drive disbursements, which have grown at 60% y-o-y during the past three quarters. It plans to float subsidiaries for renewables financing and consortium lending. A focused approach will help increase revenues at a fast pace, according to the management. The company is the nodal agency for ultra mega power projects (UMPPs) and restructured accelerated power development and reforms programme. This will step up its fee-based income. These factors will help the company grow its bottom line at a high rate.