Power Finance Corporation has announced its Q3 standalone financial results, reporting both revenue and net profit growth despite net profit falling short of market expectations. The state-owned power sector financing company demonstrated continued growth momentum in its core lending operations during the quarter.

Financial Performance Overview

The company's Q3 standalone results showed solid year-on-year improvement across key financial metrics:

Revenue Growth Analysis

Power Finance Corporation reported Q3 revenue of ₹146.00 billion, representing a significant increase from ₹130.00 billion in the corresponding quarter of the previous year. This 12.3% year-on-year revenue growth demonstrates the company's ability to expand its business operations and lending portfolio in the power sector financing segment.

Profitability Performance

The company's Q3 standalone net profit of ₹47.60 billion represents a notable increase from the ₹41.50 billion recorded in the same quarter of the previous year. This translates to year-on-year growth of 14.7%, indicating the company's ability to maintain strong earnings momentum alongside revenue expansion.

However, the reported profit figure came in below market expectations of ₹51.00 billion, representing a shortfall of approximately 6.7% from analyst estimates. This variance suggests that while the company achieved solid growth in both revenue and profitability, operational performance may have faced some margin pressures during the quarter.

Market Context

As a leading power sector financing institution, Power Finance Corporation's quarterly results provide insights into the broader power infrastructure financing landscape. The company's continued revenue and profitability growth reflects ongoing demand for power sector financing, though the miss on profit estimates indicates potential challenges in the operating environment or competitive pressures affecting net margins despite strong top-line performance.

State-run Power Finance Corp (PFC) has launched a public bond issue to raise up to ₹5,000 crore, marking a strategic shift after cancelling multiple private bond sales due to market volatility. The issue, which runs for two weeks from January 16, represents the company's first public bond issuance in 30 months.

Issue Structure and Size

The public debt issue comprises an initial offer of ₹500 crore, extendable by up to ₹4,500 crore through a greenshoe option. This structure provides PFC with flexibility to adjust the final issue size based on investor demand and market conditions.

Background: Cancelled Private Issues

PFC withdrew three consecutive private bond issuances over November and December due to volatile interest rates. These fundraisings were scrapped despite the Reserve Bank of India lowering its policy rates by a quarter percentage point in December. "There was some volatility and we wanted the market to settle down before tapping it again," said Parminder Chopra, chairman and managing director of Power Finance Corp.

Strategic Shift to Retail Investors

The decision to launch a public issue reflects PFC's strategy to diversify its investor base. "The main reason to bring out a public bond is to bring this issue to retail investors as we see it as a strong avenue to mobilise domestic funds," Chopra explained. This approach allows the company to tap into a broader investor pool beyond institutional players.

Bond Terms and Pricing

PFC is offering bonds across multiple maturities with competitive coupon rates for different investor categories:

Additionally, PFC has introduced a zero-coupon option for investors with a 10-year and 1-month maturity, offering differentiated yields:

Cost Benefits and Market Conditions

Under the current public issuance, PFC is effectively lowering its borrowing costs by 10 to 25 basis points compared to previous attempts. The company had scrapped a five-year privately placed bond issue in late December that would have carried coupons of 6.95% to 7.25%. Corporates withdrew from raising debts after the 10-year government bond yield, which serves as the benchmark for corporate borrowing, rose about 10 basis points to 6.62% since the RBI cut rates in early December.

Chopra also noted that the company has been utilising the term loan market amid volatile bond rates. "Term loans are available at attractive rates and have been cheaper by 50-70 basis points than bond rates," he said, highlighting PFC's flexible approach to funding across different market conditions.