Power Fin Corp July 23 NCD review (Apply)

• PFC is a Maharatna PSU engaged in power sector financing and servicing.
• It has posted steady growth in its top and bottom lines for the reported periods.
• This debt offer has AAA/Stable rating from CRISIL, CARE and ICRA.
• Investors looking for steady regular income may park funds for the long term.

ABOUT COMPANY:
Power Finance Corporation Ltd. (popularly known as PFC) is incorporated by the Government of India (GoI) to finance, facilitate and promote power sector development in India with the President of India, acting through the MoP, holding 100% of its paid-up equity share capital at the time of incorporation. The President of India, acting through the MoP, held 55.99% of paid-up equity share capital as of March 31, 2023.

The company is a systemically important non-deposit taking non-banking financial company ("NBFC") registered with the Reserve Bank of India ("RBI") under section 45 IA of the RBI Act, 1934 bearing registration number 14.00004 dated February 10, 1998. On July 28, 2010, it was classified as an Infrastructure Finance Company ("IFC") vide registration certificate number B-14.00004. PFC was also conferred with the 'Mini Ratna' (Category - I) status on September 15, 1998, and on June 22, 2007, it was notified as a Navratna company by GoI. Further, on October 12, 2021, the company was conferred with Maharatna status by the GoI.

PFC is one of India's leading public financial institutions focused on the power sector. Its portfolio includes financial products and services such as rupee term loans, short-term loans, equipment lease financing, transitional financing services etc. for various power projects in the generation, transmission, and distribution sectors. Of late it has also expanded its activities for forward/backward linkages to core power sector projects. It also funds power trading activities. PFC is a listed PSU and is involved in various GoI programs relating to the power sector and supports initiatives like Atmanirbhar Bharat. As of March 31, 2023, it had 519 employees on its payroll. In addition, it keeps employing contract labourers from time to time.

ISSUE DETAILS:
The company is coming out with an issue of secured, rated, listed, redeemable NCDs of the face value of Rs. 1000 each for an amount of Rs. 500 cr. It has a green shoe option to retain oversubscription to the tune of Rs. 4500 cr., thus the overall debt issue size will be Rs. 5000 cr. The issue opens for subscription on July 21, 2023, and will close on or before July 28, 2023. It has a shelf limit of Rs. 10000 cr.

PFC is spending Rs. 24.19 cr. for this NCD issue process. From the net proceedings, it will utilize at least 75% for onward lending, financing/refinancing the existing indebtedness of the company, repayment/prepayment of existing borrowings, and a maximum of up to 25% for general corporate purposes.

The minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE.

This debt offer has a tenor of 3 years., 10 years., and 15 years. and the interest payment frequency shall be annually only. The company is offering coupon rates ranging between 7.45% to 7.55% as per the selection of the series. PUT and CALL options are not applicable for this debt offering. PFC has allocated 10% for the institutional portion, 10% for the non-institutional portion, 40% for HNIs and 40% for Retail investors.

This debt offer is jointly lead managed by JM Financial Ltd., A K Capital Services Ltd., Nuvama Wealth Management Ltd. - (formerly known as Edelweiss Securities Ltd.), SMC Capitals Ltd., and Trust Investment Advisors Pvt. Ltd. KFin Technologies Ltd. is the registrar of the issue, and Beacon Trusteeship Ltd. is the Debenture Trustee.

CREDIT RATINGs:
This debt offering is rated "CRISIL AAA/Stable" by CRISIL Ratings Ltd., "CARE AAA/Stable" by CARE Ratings Ltd., and "ICRA AAA/Stable" by ICRA Ltd.

These ratings are not a recommendation to buy, sell or hold securities and investors should make their own decisions. These ratings are subjected to a periodic review during which they may be raised, affirmed, lowered, withdrawn, or placed on Rating Watch at any time based on factors such as new information. Each rating should be evaluated independently of any other rating.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, PFC has (on a consolidated basis) posted a total revenue/net profit of Rs. 71700.67 cr. / Rs. 15716.20 cr. (FY21), Rs. 76344.92 cr. / Rs. 18768.21 cr. (FY22), and Rs. 77625.19 cr. / Rs. 21178.59 cr. (FY23). Thus it has marked steady growth in its top and bottom lines for the reported periods.

As of March 31, 2023, its Rs. 2640.08 cr. paid-up equity capital is supported by free reserves of Rs. 81518.41 cr. Net NPAs as of the said date were 1.87% (PFC) and 2.41% (RECL). Its debt-equity ratio of 5.32 as of March 31, 2023, will increase to 5.46 post this debt issue.

Conclusion / Investment Strategy

Investors across the board are always eager for debt offers from fancy PSUs and PFC is one among them. The company is one of the leading power sector financings and servicing PSU with steady growth in its earnings. This debt issue has AAA/Stable ratings from CRISIL, CARE and ICRA. Investors looking for steady income may consider long-term fund parking.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on July 19, 2023

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

The Power Finance Corporation NCD July 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Power Finance Corporation NCD July 2023 worth investing. The Power Finance Corporation NCD July 2023 Note sets the NCD expectations in systematic way which tells you if Power Finance Corporation NCD July 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Power Finance Corporation NCD July 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Power Fin Corp July 23 NCD review (Apply)

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